After three consecutive 25 point rate both June, July, and September, the Bank of Canada has cut their prime rate once again. This time however it was the biggest cut to date, with a 50 point decresease in today's announcement. With this cut, the Bank of Canada policy interest rate sits at 3.75%.
In his prepared statement this morning Tiff Macklem, the Governor of the Bank of Canada, discussed falling inflation fuelled this decision. "We took a bigger step today because inflation is now back to the 2% target and we want to keep it close to the target. In the past few months, inflation has come down significantly from 2.7% in June to 1.6% in September. Recent indicators suggest it will be around 2% in October. Price pressures are no longer broad-based, and both our measures of core inflation are now under 2½%. Our surveys also find that business and consumer expectations of inflation have shifted down and are nearing normal. All this suggests we are back to low inflation. This is good news for Canadians." (Bank of Canada, 2024)
Economists expected another cut but were divided on if we would see 25 or 50 basis points slashed from the prime rate. Macklem said this about deciding on a larger rate cut and where the Bank will head from here. "Now our focus is to maintain low, stable inflation. We need to stick the landing. That means the upward and downward forces on inflation need to balance out. Household spending and business investment have picked up this year, but remain soft. This softness has helped take the remaining steam out of inflation. But with inflation back to 2%, we want to see growth strengthen. Today’s interest rate decision should contribute to a pickup in demand." (Bank of Canada, 2024)
The Bank of Canada's next rate announcement is scheduled for December 11, 2024 and is the final announcement for the calendar year.
Graph Courtesy: Bank of Canada; https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
Quotes Courtesy: Bank of Canada; https://www.bankofcanada.ca/2024/10/opening-statement-2024-10-23/
Here at Jump Realty our agents will give you honest advice on what course of action is best for you in their professional opinion and will always put taking care of your best interests first! With offices in Windsor, Tecumseh, Kingsville, LaSalle, Harrow, Chatham, and Leamington, no matter where you are, a Jump agent is ready to help. Please contact us for any housing needs and let us give you a better real estate experience!
