Canada’s central bank likely to lower interest rates to boost the economy

Posted on September 9, 2024   |  

The Bank of Canada is expected to cut its key overnight rate by 25 basis points due to rising unemployment and slow economic growth.

The central bank has already reduced its key rate by 50 basis points over the last two meetings, leading the way among G7 countries in lowering borrowing costs.

Another 25-basis-point cut would bring Canada’s interest rate to 4.25%.

Canada’s inflation rate dropped to 2.5% in July, the lowest in 40 months, staying within the central bank's 1% to 3% target range, which supports more rate cuts.

Unlike the U.S., Canada has been lowering interest rates, though markets now expect the Federal Reserve to cut rates in September.

The European Central Bank, which cut rates in June, has paused since then, but economists predict a rate cut in September.

Canada's economy grew by 2.1% in the second quarter, but GDP was flat in June and is expected to remain unchanged in July.