The Bank of Canada decided to cut the interest rate by 50 basis points to support economic growth and keep inflation around 2%. This measure, which sets the interest rate at 3.75%, is the fourth time the Canadian monetary authority has reduced the index since June.
According to statements from the institution, it is expected to continue lowering rates if the economy evolves according to forecasts. The next announcement regarding rates is scheduled for December 11. Canada became the first G7 economy to cut interest rates in response to the pandemic in June, lowering from 5% to 4.75%.
The Bank of Canada had started raising interest rates in March 2022, moving from 0.25% to 0.5%, to control inflation, which had reached 8.1% in June of that year. The entity had maintained rates at 5% since July 2023. However, inflation has decreased significantly in recent months, falling from 2.7% in June to 1.6% in September.
The Bank of Canada's forecast indicates a growth of 1.2% for the country in 2024, 2.1% in 2025, and 2.3% in 2026. This interest rate cut is justified by the stabilization of inflation around the target of 2%, marking a change in monetary policy to boost the national economy.