Bank of Canada cuts major interest rate down to 3.75 per cent

The Bank of Canada announced Wednesday morning that it has cut its policy rate down to 3.75 per cent, the fourth drop made this year.

The bank’s governor Richard Tiff Macklem and senior deputy governor Carolyn Rogers is scheduled to make a public announcement at around 10:30 a.m. on this month’s monetary policy report.

The bank has now lowered its key policy interest rates four times this year so far, from a height of five per cent at the start of the year.

Statistics Canada reported last week that the annual inflation rate fell 1.6 per cent in September, dropping below the bank of Canada’s target of two per cent.

The Bank of Canada attributes the slowdown in price growth to shelter price inflation easing, supply outpacing demand in the economy and global oil pricing falling.

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In a press release, the bank says Canada’s economy grew at around two per cent over the first half of this year, and expects a growth of 1.75 per cent in the second half.

It is now forecasting inflation will hover around its two per cent target throughout its projection horizon, extending into 2026.

The press release also reads that if the economy evolves broadly according to their forecast, they expect they will reduce the policy rate further.

For homeowners a rate cut by The Bank of Canada will translate into lower prime rates at the big commercial banks, lowering the cost of variable-rate mortgages and other variable-rate loans.

The Bank of Canada is scheduled to make it’s next rate announcement on Dec. 11.

The bank will also publish a full outlook for the economy and inflation on Jan. 29, 2025.

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With files from the Canadian Press