October 23, 2024 – Bank of Canada Announcement

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The Bank of Canada has slashed its benchmark rate by 50 basis points, announcing the oversized cut amid continuing signs of a sluggish economy and plunging inflation.

As concerns over inflation have subsided – out-of-control price growth, the catalyst for the central bank’s initial rate-hike campaign, is now back within the target range – the bank has focused on cutting to keep inflation stable and support economic growth, which has slowed under the pressure of high rates.

“We need to stick the landing,” Bank of Canada governor Tiff Macklem told a news conference Wednesday morning.

“With inflation back to two per cent, we want to see growth strengthen. Today’s interest rate decision should contribute to a pickup in demand.”

Macklem outlined the economic conditions that informed the bank’s rate cut decision. He noted that core inflation has continued to ease, as has shelter inflation, though he noted that housing prices are still elevated.

“Job layoffs have remained modest but business hiring has been weak, which has particularly affected young people and newcomers to Canada. Simply put, the number of workers has increased faster than the number of jobs,” he added.

Macklem noted during the conference that, should the economy continue to evolve in line with its forecast, the bank expects to reduce the policy rate further. But he cautioned that the timing and pace of cuts would depend on incoming economic data and its potential impact on the bank’s inflation outlook.

He repeated a now familiar refrain, saying that the Bank of Canada will take decisions one meeting at a time.

The Bank is scheduled to make its final interest rate decision of the year on December 6, with market watchers expecting cuts to continue in the coming months.