The Bank of Canada has accelerated the pace of the interest rates cutting.
It’s worth noting that the mentioned actions of the specified financial regulator signal that the era of high inflation, which formed as a clear economic reality after the end of the coronavirus pandemic, is over.
Policymakers led by Governor Tiff Macklem on Wednesday, October 23, decided to cut the benchmark overnight rate by 50 basis points. Now the corresponding indicator is at 3.75%. It is worth noting that in this case, there has been the most significant lowering in the cost of borrowing in Canada since March 2020, when the country was faced with the circumstances and conditions of the first days of the coronavirus pandemic.
It is worth noting that economists, interviewed by the media, and markets predicted that the mentioned financial regulator would decide in October on large-scale interest rates cutting. The corresponding decision of the Bank of Canada is aimed at stimulating economic growth. Also, in this case, the financial regulator seeks to keep inflation near the target level of 2%.
Headline price pressure in Canada slowed to 1.6% in September. Also, at present, a gradual approximation of inflation expectations to the norm is being recorded in this country.
The latest forecasts of the Bank of Canada contain expectations that policymakers will be able to achieve the implementation of the so-called soft landing scenario. In this case, it means a state of affairs in which inflation is normalized and at the same time there is no deep economic downturn.
The Bank of Canada also predicts that the gross domestic product (GDP) of this country will show growth of 1.2% in the current year. Moreover, the financial regulator expects inflation in 2024 in Canada to be near the midpoint in the range of 1% to 3%.
Tiff Macklem said Ottawa is returning to low inflation. According to him, the Bank of Canada is currently focused on maintaining the mentioned indicator and ensuring its stability. He also stated that the financial regulator now sees upward and downward risks to its inflation projection as reasonably balanced.
As we have reported earlier, ECB Cuts Rates Again.
