The Bank of Canada has reduced its benchmark interest rate by 25 basis points, bringing it down to 4.75%. This decision marks the first rate cut by the central bank in recent years and is aimed at addressing economic conditions that have shown signs of improvement, such as easing inflation and a stronger-than-expected economic performance.
The central bank’s governor, Tiff Macklem, indicated that the rate cut is part of a broader strategy to manage inflation, which is projected to ease over the coming quarters. However, inflation is expected to remain above the 2% target until at least the second quarter of 2025.
Economists have mixed views on the timing of this rate cut, with some predicting that further cuts could be delayed if economic growth remains strong. The Bank of Canada is expected to continue monitoring economic indicators closely to determine the appropriate timing for any additional adjustments to interest rates.
