On Wednesday, the Bank of Canada (BOC) did something they haven’t done in over four years. The Bank of Canada announced that it is dropping its key interest rate at 4.75%, with the bank rate at 5% and the deposit rate at 4.75%.
“With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points,” said the Bank of Canada in a release.
“Recent data has increased our confidence that inflation will continue to move towards the 2% target.”
We have lowered our policy interest rate to 4.75%.
Learn more: https://t.co/vh3hq6sEA4#economy #cdnecon pic.twitter.com/EJ4uGESc4K
— Bank of Canada (@bankofcanada) June 5, 2024
The Bank of Canada kept its key interest rate at 5% six consecutive times before today’s drop. The central bank introduced several interest rate hikes in 2022 and even into 2023.
“Nonetheless, risks to the inflation outlook remain,” added the Bank.
Inflation in Canada dropped to 2.7% in April and data suggests inflation will continue to drop. However, when it comes to shelter costs, “inflation remains high”.
The next scheduled date for announcing the overnight rate target is July 24, 2024.
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