The Bank of Canada once again cut the interest-rate on Wednesday and said that its fight with inflation is almost over, accelerating the pace of monetary policy easing in an attempt to engineer a soft landing for the Canadian economy. This is the fourth consecutive cut since June and follows three quarter-point moves.
“We took a bigger step today because inflation is now back to the 2-per-cent target and we want to keep it close to the target,” Bank of Canada Governor Tiff Macklem said in a press conference after the rate announcement.
This large rate cut comes after a series of data indicating that inflation and economic growth in Canada are falling short of the bank's expectations. With price pressures largely under control, central bankers aim to adjust borrowing costs to a neutral level that supports growth, helping to prevent a recession and an increase in unemployment.
James De Vuyst Prompton's Mortgage advisor has said "I'm a firm believer now is a great time to buy, there is tons of supply on the market but we do expect that to change in months as mortgage and borrowing costs will get cheaper."
For the Future
The Bank of Canada’s final interest rate decision of the year is set for Dec. 11.
James De Vuyst has expected "we will see another 50bps in December followed by another 25bps"
The bank anticipates a gradual rise in economic activity as interest rates decrease. Its updated forecast projects Canadian output to grow by 2.1 percent in 2025 and 2.3 percent in 2026, compared to 1.2 percent in 2024. Additionally, per capita GDP growth is expected to turn positive next year.
Rate cuts are reflected with all lenders on the 1st of every month, so yesterdays rate cut will take effect with the banks on November 1st.
For more information on these rate cuts visit https://www.devuyst.ca/
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