Canada Monetary Policy
Research Brief

Bank of Canada followed up with a third rate cut. Facing the sustained easing of inflationary pressures and slack in the labour market, the Bank of Canada (BOC) lowered the overnight rate by another 25 basis points at its September meeting. With recent indicators pointing to weaker-than-expected economic growth in the third quarter, Governor Tiff Macklem struck a dovish tone at the press conference, stressing that the monetary authority is alert to the risks of an overly weak economy and inflation falling below target. Lower interest rates will moderate increases in mortgage interest costs, the main contributor to the current above-target price growth. As shelter inflation tempers, overall price pressures are expected to remain on a downward trajectory in the near term. This will pave the way for further rate cuts by the central bank to maintain a healthy level of economic growth while keeping inflation in check.