Bank of Canada cuts its policy rate by another half point
The Bank of Canada cut its policy rate by 50 basis points to 3.25 per cent on Wednesday, a move widely expected by economists and markets.
The Dec. 11 decision marks the fifth consecutive cut by the central bank this year and the second half-point cut in a row to the overnight rate. The last times the bank made two consecutive half-point cuts were at outset of the pandemic in 2020 and during the 2008 financial crisis. The overnight rate now sits at the top of the central bank’s neutral range.
“With inflation back to target, we have cut the policy rate by 50 basis points at each of the last two decisions because monetary policy no longer needs to be clearly in restrictive territory,” said
Bank of Canada Governor Tiff Macklem, during prepared remarks in Ottawa. “We want to see growth pick up to absorb the unused capacity in the economy to keep inflation close to two per cent.”
Bank of Montreal chief economist Douglas Porter noted the Bank of Canada has now cut by 175 basis points this year.
“The bank thus retains the crown of most aggressive rate-cutter in the world (no other G10 central bank has cut by more than 125 basis points and the Fed is at 75 basis points so far),” he said, in a note to clients.
The central bank acknowledged growth in the second half of 2024 is expected to be slower than forecast. Growth in the third quarter came in at one per cent, below the bank’s forecast of 1.5 per cent, and early estimates for the fourth quarter are expected to come in softer than anticipated. In addition, the jobless rate hit 6.8 per cent in November, as the number of jobs grew more slowly than the labour force.
Toronto-Dominion Bank senior economist James Orlando, however, said he did not believe the 50-basis point cut was
Read more on financialpost.com
