Bank of Canada Lowers Policy Rate to 4.25% Amid Easing Inflation Pressures
Source: Bank Of Canada Media Relations Sept 4th 2024
In its latest move to balance inflation and economic growth, the Bank of Canada has reduced its policy interest rate by 25 basis points, bringing it down to 4.25%. This decision comes as global and domestic economic conditions show signs of moderation.
Key Highlights:
- The global economy expanded by 2.5% in the second quarter, with mixed performance across regions. The U.S. saw stronger-than-expected growth, while Europe benefitted from a boost in services like tourism. In contrast, China’s economy was hampered by weak domestic demand.
- In Canada, the economy grew by 2.1% in the second quarter, slightly above expectations. However, recent indicators suggest a slowdown in activity through June and July. The labour market remains stagnant, though wage growth continues to outpace productivity.
- Inflation in Canada eased to 2.5% in July, with core inflation measures stabilizing around the same level. High shelter costs remain the largest contributor to overall inflation but are beginning to slow.
With these developments, the Bank’s Governing Council decided to lower the policy rate to support the economy while continuing its balance sheet normalization efforts. The Council remains vigilant in monitoring inflationary pressures and is committed to restoring price stability for Canadians.
For those in the real estate market, this rate cut could translate to slightly lower borrowing costs, potentially easing the financial burden for homebuyers and investors. As always, it’s important to stay informed and consider how these changes may impact your real estate decisions.
The Bank of Canada’s next scheduled rate announcement is set for October 23, 2024, where it will also release its updated economic outlook.
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