Bank of Canada cuts interest rates before ECB

The Bank of Canada (BoC) decided this Wednesday to cut interest rates by 25 basis points (a quarter of a percentage point), after a cycle of interest rate hikes between March 2022 and July 2023.

It is the third central bank in developed economies to begin a cycle of lowering policy rates, after Switzerland in March and Sweden in May, whose monetary authorities also opted for a first reduction of a quarter of a percentage point.

The BoC’s policy rate now stands at 4.75% compared to 5.5% for the United States, 4.5% for the euro zone (in the case of the refinancing rate) and 5.25% for the UK.

The Canadian monetary authority ended up anticipating the European Central Bank (ECB), which is expected to cut interest rates on Thursday by the same amount. Richard Tiffany Macklem, the governor, considered that the disinflation path – of decreasing inflation – currently underway now allows the restrictive policy to be eased a little.

The BoC governor did not anticipate any monetary policy for the rest of the year, opting for the same position as the North American Federal Reserve and the ECB of taking decisions on a meeting-by-meeting basis.

In futures markets, it is anticipated that the BoC’s key rate will fall to 4.28% at the end of the year, leaving room for one to two more interest cuts.


Francesco Giganti

Journalist, social media, blogger and pop culture obsessive in newshubpro

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