The Bank of Canada lowered its key interest rate to 4.25 percent on Wednesday, marking the third consecutive reduction since June. This cut follows "continued easing in broad inflationary pressures."
The interest rate was reduced by another 25 basis points, continuing the pattern established earlier this summer with reductions to 4.75 percent in June and 4.5 percent in July. Major banks are expected to follow suit with their own 25 basis point cuts.
This latest reduction is anticipated to lower monthly mortgage payments, although the exact amount will vary depending on the loan's size and term. Homeowners should see a decrease in their monthly payments as a result of the cut.
Economists widely anticipated this move, as the central bank had previously indicated that further reductions would occur if inflation continued to slow. In July, Canada's annual inflation rate decreased to 2.5 percent, down from 2.7 percent in June, according to Statistics Canada. This is the lowest rate since March 2021, when inflation began to rise due to pandemic-related pressures and supply disruptions.
Looking ahead, the central bank may continue to adjust rates depending on the trajectory of inflation and economic conditions.
Reference: https://www.cbc.ca/news/business/bank-interest-rate-1.7312774
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