The Bank of Canada lowered its benchmark interest rate to 4.50% today, which was expected. The prime lending rate is now 6.7%, putting us back to what the rate was June 2023. This move is aimed at easing financial burdens for Canadian homeowners and those looking to buy homes. It’s the second rate cut since March 2020. The Bank mentioned that inflation is expected to come closer to 2% and acknowledged ongoing price pressures in certain sectors like housing.
The Bank provided an overview of the global and Canadian economies, forecasting moderate growth and gradual easing of inflation. It also mentioned that the Canadian economy is still facing challenges, such as excess supply and weak household spending.
Overall, the Bank projects GDP growth to improve in the coming years, absorbing the excess supply and moderating inflation. The Bank’s focus remains on restoring price stability for Canadians, with future monetary policy decisions based on economic data and its impact on the inflation outlook.
The next rate announcement is set for Wednesday, September 4, 2024.