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Bank of Canada Cuts Interest Rate

Wednesday, 24 July 2024 at 12:48

By Geoff Waterfield

It's now at 4.5%, after the bank dropped it a 1/4 point, saying there's progress on inflation

There's more good news for anyone looking to renew a mortgage soon.

The Bank of Canada has made another cut its key interest rate, dropping it another quarter point to 4.5%.

The bank says continued progress on getting inflation back down to its 2% target and weakening economic conditions were the key reasons behind the cut. 

High borrowing costs have caused a reduction in spending, which economists say has slowed the increase in prices. 

The bank's governor, Tiff Macklem asked numerous times by reporters today if further rate cuts are coming through the year.

He pointed to two opposing forces.  "Excess supply in the economy, slack in the labour market, that's pulling inflation down.  But, we're seeing on-going pressures in shelter price inflation, we're also seeing some price pressures in some other services, those things are holding inflation up."

Macklem was also asked about how increased immigration impacts gross domestic product.

"That's boosting GDP... If you think of it from the perspective of a business, whether demand is up because individual households are consuming more, or because there's more households, that doesn't matter, there's still more demand."

He said while households are spending less, immigration means more households.

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