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Special Report

Canada Monetary Policy
Research Brief

July 2024

Real Estate Markets Adjusting to Lower Rates
as Central Bank Extends Its Easing Cycle

The Bank of Canada delivered its second rate cut. As inflation pressures continued to unwind, the BoC reduced interest rates by 25 basis points in July. With weak household spending and signs of slack in the labour market, the bank now expects inflation to ease further in the foreseeable future. While this decision was broadly in line with market expectations, the monetary authority struck a more dovish tone in the press conference. BoC governor Tiff Macklem emphasized that, with increasing excess supply in the economy, the downside risks of weaker-than-expected growth are becoming more concerning. This indicates that the bank has transitioned to supporting GDP growth so that inflation does not retract significantly. Looking ahead, if inflation continues on a downward trajectory, a cut at every policy meeting for the remainder of 2024 is possible.

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