Canada Monetary Policy
Research Brief

Bank of Canada accelerates loosening cycle. Canada’s Central Bank lowered its key policy rate by 50 basis points in October, bringing it to 3.75 per cent – the lowest reading in two years. This bucked the recent trend of three-consecutive 25-basis-point cuts, as Canada’s monetary authority has become increasingly concerned about downside risks to economic growth. The Bank of Canada cited many reasons for its outsized rate cut, including inflation roughly returning to the 2.0 per cent target, a still-soft labour market, declining per capita consumption and an economy that continues to operate in excess supply. With price pressures no longer broad-based and the Central Bank concerned about GDP growth, additional interest rate cuts are anticipated over the remainder of the year and into 2025. The general consensus now stands at a terminal overnight rate of 2.25 per cent to 2.50 per cent at some point next year.