The Bank of Canada’s rate cut on Oct. 23rd decreased its key interest rate to 3.75%.
This is the first 50-basis-point cut since March 27, 2020 during the COVID-19 pandemic. At that time, two 50-basis-point cuts were also made on March 4 and 13.
The rate was 4.25% prior to the cut. Compared to the 25-basis-point downgrades over the summer months, industry experts anticipated the more sizeable cut.
Inflation has been an ongoing cause of concern and frustration across Canada. The Bank of Canada initial response was to raise interest rates.
Now that inflation is showing greater stability, the central bank is focused on maintaining that with cuts.
“We need to stick the landing…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.” -Tiff Macklem, Bank of Canada governor.
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Image source: Bank of Canada/Flickr
