Bank of Canada Lowers Key Interest Rate by 0.5% to 3.75%: October 23, 2024
Today, the Bank of Canada announced a significant change to its monetary policy by cutting the key interest rate to 3.75%. This marks the fourth consecutive reduction in what has been a long-awaited easing cycle aimed at stimulating the economy.
Bank of Canada Lowers Key Interest Rate by 0.5%
Key Details of the Interest Rate Change
New Rate: The Bank of Canada's key interest rate is now set at 3.75%.
Previous Rate: The rate was previously at 4.25%, indicating a reduction of 0.50% today.
Context: This decision follows a series of cuts that began in June 2024, as the Bank shifts its focus from combating inflation to addressing potential downside risks to economic growth.
Implications of the Rate Cut
Economic Stimulus: Lower interest rates generally make borrowing cheaper, which can encourage spending and investment by both consumers and businesses. This is particularly important as the Canadian economy has shown signs of stagnation since mid-2023.
Inflation Control: The Bank of Canada has been actively managing inflation, which peaked at 8.1% in June 2022 but has since decreased to around 1.6% as of September 2024. The recent cuts are part of a strategy to balance economic growth while keeping inflation within the target range of 2%.
Housing Market Impact: With the cost of borrowing lower, there may be renewed activity in the housing market, which has been affected by previous rate hikes. This could help alleviate some pressures on affordability for potential homebuyers.
Looking Ahead
The next scheduled interest rate announcement from the Bank of Canada is set for December 11, 2024. Analysts and economists will be closely monitoring economic indicators and inflation trends leading up to this date to gauge the potential for further adjustments.
Learn more:
