Notes From The Desk: The BoC Rate Announcement – The Big Ease-y
This morning, the Bank of Canada (BoC) reduced the overnight rate by 50 bps to 3.75%. Since June, the BoC has lowered the policy rate by 1.25%.
The takeaways:
- With inflation falling to the 2% target range, the BoC’s rationale for a 50 bps cut was to support growth, which in Q3 was below their forecast.
- There were no significant changes to the Monetary Policy Report (MPR), with growth and inflation revised slightly lower in 2024 and modestly higher in 2025.
Looking ahead:
Another cut in December is a foregone conclusion, with the question being 25 bp or another 50 bps. With the BoC focused on ‘sticking the landing’, this will depend on how growth plays out for the rest of the year. If Q4 GDP appears to be lower than the forecasted 1.8%, we expect another 50 bps cut.
