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Ekonomické zprávy
24.07.2024

BoC reduces its benchmark interest rate to 4.50%, as widely anticipated

The Bank of Canada (BoC) reduced its benchmark interest rate by 25 basis points to 4.50 per cent on Wednesday, as widely anticipated. This was the second straight cut in the BoC’s key interest rate. 

In its policy statement, the Canadian central bank noted:

- Canada’s economic growth likely picked up to about 1.5% through the first half of this year;

- There are signs of slack in the labour market;

- Wage growth is showing some signs of moderating, but remains elevated;

- GDP growth is forecast to increase in the second half of 2024 and through 2025;

- BoC forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026. The strengthening economy will gradually absorb excess supply through 2025 and into 2026;

- Broad inflationary pressures are easing;

- Shelter price inflation remains high and is still the biggest contributor to total inflation. Inflation is also elevated in services that are closely affected by wages, such as restaurants and personal care;

- BoC’s preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025;

- BoC expects CPI inflation to come down below core inflation in the second half of this year;

- Today’s decision to cut rates by another 25 basis points was taken amid signs that broad price pressures are continuing to ease and expectations that inflation will move closer to 2%;

- Ongoing excess supply is lowering inflationary pressures;

- Governing Council is carefully assessing these opposing forces on inflation;

- Monetary policy decisions will be guided by incoming information and the BoC’s assessment of their implications for the inflation outlook;

- BoC remains resolute in its commitment to restoring price stability

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