Monetary Policy Statement from the Bank of Canada and Key Highlights

On Wednesday, the Bank of Canada announced a 50 basis point interest rate cut,
bringing the rate down to 3.75%.
This decision followed a two-day meeting of the Monetary Policy Committee.
Below are the key points from the bank’s statement:

Content

Key Highlights

Key Highlights

The Bank of Canada’s monetary policy has successfully eased price pressures in the Canadian economy,
with inflation now around 2%.
It is expected to remain within the mid-range of the 1% to 3% target.

The decline in consumer price index inflation is attributed to lower energy prices
and weaker inflationary pressures,
though inflation remains widespread across many sectors.

Inflation is expected to remain close to the 2% level,
with a gradual decline in core inflation.
However, the bank is concerned about the potential for inflation to exceed or fall below the target.

Economic growth in the second quarter was stronger than expected,
but weaker growth is anticipated for the third quarter,
with a drop in GDP per capita.

In the labor market, data showed rising unemployment among newcomers and young people,
alongside increasing wage growth.

The bank expects average economic growth to be around 2.25% in 2025-2026,
supported by increased consumer spending and business investment.

Global growth is projected to be around 3%,
amid a slowdown in the United States and weakness in the Eurozone,
while China faces economic deceleration due to weak domestic demand.

Oil prices have declined but remain volatile due to weak demand
from China and geopolitical concerns.

The inflation rate fell to 1.6% in September, down from 2.7% in June,
while housing prices continue to rise.

The savings rate increased to 8% in the third quarter,
higher than the 3% average during 2010-2019, thanks to higher returns on savings.

Monetary Policy Statement from the Bank of Canada and Key Highlights

Monetary Policy Statement from the Bank of Canada and Key Highlights

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