Bank of Canada Cuts Policy Rate By Half-Point to 3.25%
2024-12-11
Category: economic

By Paul Vieira
OTTAWA-For the second time in a row, the Bank of Canada cut its main interest rate by a half-percentage point, saying lower rates are needed to address weaker-than-expected growth and a softening labor market.
At the same time, central bank officials are no longer explicitly saying that further rate cuts can be expected, as they did in previous policy decisions. Gov. Tiff Macklem said the Bank of Canada has deeply reduced borrowing costs since June, by a cumulative 1.75 percentage points, and the impact from those decisions have yet to work their way through the economy.
"We anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected," Macklem said, according to prepared remarks he is set to deliver at a Wednesday morning press conference. "Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook."
In its final decision of 2024, the central bank lowered its target for the overnight rate to 3.25% from 3.75%, marking the fifth straight reduction in interest rates. The benchmark interest rate sat at 5% at the start of 2024. This also marks the first time excluding either a recession or extraordinary events — notably the Covid-19 pandemic, the 2008-09 financial crisis, and the Sept. 11, 2001 terrorist attacks — that the central bank has delivered back-to-back half-point cuts.
Write to Paul Vieira at paul.vieira@wsj.com