Bank of Canada delivers half-percentage point rate cut

The Bank of Canada attributes the slowdown in price growth to shelter price inflation easing, supply outpacing demand in the economy and global oil pricing falling.

The Bank of Canada delivered a supersized interest rate cut Wednesday in response to the recent decline in inflation, bringing its key policy rate down by half a percentage point.

With annual price growth now around two per cent, the central bank says its job has shifted from lowering inflation to maintaining it around the inflation target.

“We took a bigger step today because inflation is now back to the two per cent target and we want to keep it close to the target,” Governor Macklem said in his opening statement.

Wednesday marked the central bank’s fourth consecutive interest rate cut since June. Its policy rate now stands at 3.75 per cent, down from a height of five per cent.

The Bank of Canada attributes the slowdown in price growth to shelter price inflation easing, supply outpacing demand in the economy and global oil pricing falling.

It’s now forecasting inflation will remain around the two per cent target throughout its projection horizon, which extends to 2026.