What happened?

The Bank of Canada announced today that it has cut its key interest rate by 25 basis points, bringing it down to 4.25%. The Bank Rate is now set at 4.5%, and the deposit rate at 4.25%. This third consecutive rate cut comes as the Bank continues its policy of balance sheet normalization, aimed at stabilizing inflation and promoting economic growth. In July, the key interest rate was lowered to 4.5% from 4.75% in June.

Key highlights from the announcement

• Global economic overview: The global economy grew by 2.5% in Q2, with strong U.S. economic performance driven by consumption. However, the U.S. labor market has weakened. Euro-area growth saw support from tourism, but manufacturing lagged. China’s economy is being slowed by weak domestic demand.
• Canadian economic growth: The Canadian economy expanded by 2.1% in Q2, surpassing July forecasts. Growth was driven by government spending and business investment. Despite this, there were signs of weaker activity in June and July. The labor market has slowed, with limited employment changes in recent months, although wage growth remains high relative to productivity.
• Inflation trends: Inflation in Canada eased to 2.5% in July, with core inflation measures averaging the same. High shelter prices remain the largest contributor to overall inflation, though pressures have started to ease. While inflation is slowing broadly, certain services continue to see elevated price increases.
• Monetary policy decision: Given...

Read Full Story: https://news.google.com/rss/articles/CBMiqwFBVV95cUxPcV9FQm1HMmNBZWhzRVUxRmJS...