Bank of Canada Cuts Interest Rate to Support the Economy: The Bank of Canada announced a new cut in the key interest rate
to address inflation and support the Canadian economy.
This decision seeks to tackle domestic and global economic challenges affecting growth and employment rates.
Below is a detailed overview of the bank’s statement and the expected impact on the Canadian economy.

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On Wednesday, the Bank of Canada reduced the key interest rate by 50 basis points
to 3.25% while maintaining the bank rate at 3.75% and the deposit rate at 3.25%.
The bank stated that it made this decision in response to several local and global economic factors.

The bank noted that Canada’s GDP growth in the third quarter stood at 1%,
which was below expectations, impacted by weak business investment, inventories, and exports.
Conversely, consumer spending and housing activity increased, reflecting the effects of lower interest rates.

In the labor market, the unemployment rate rose to 6.8%
in November as employment growth slowed compared to labor force growth.
Despite signs of a slowdown, wage growth remained high.
The bank pointed out that reduced immigration is expected to affect GDP growth next year negatively.

The bank stated that the Consumer Price Index (CPI)
inflation was around 2% and is expected to remain near this target over the next two years.
It also highlighted that temporarily suspending the Goods and Services Tax would reduce inflation,
but this effect would be short-lived.

Globally, the bank noted that the U.S. economy remains strong,
with robust consumer spending and a thriving labor market,
Experts expect growth in the eurozone to weaken,
while in China, policy measures and strong exports drive growth despite weak household spending.

The Bank of Canada affirmed its commitment to monitoring economic data
and inflation expectations to make future decisions on interest rates,
emphasizing its dedication to maintaining price stability and achieving its inflation target of 2%.

A Look at Economic Decisions: Bank of Canada Cuts Interest Rate to Support the Economy

Bank of Canada Cuts Interest Rate to Support the Economy

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