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BOC: BOC Cuts 50bps to 3.25%, Will Take A More Gradual Approach

BOC
Bank of CanadaCentral Bank NewsCanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • Bank of Canada cut interest rates for a fifth time in a row, by 50 bps to 3.25%, in line with market expectations. 
  • "With the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as 
    expected. Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook," Governor Macklem said. 
  • BOC said Q4 growth will be lower than projected, job market remains soft and reduced immigration will dampen growth in months ahead.
  • "Monetary policy no longer needs to be clearly in restrictive territory. We want to see growth pick up to absorb the unused capacity in the economy to keep inflation close to 2%."
  • BOC will be looking at core inflation to assess the trend in CPI after some tax breaks. "We expect the GST  holiday to temporarily lower inflation to around 1.5% in January, but that effect will be unwound after the GST break ends in mid-February. "
  • Macklem also said that US tariff threats are a "major new uncertainty". 
  • BOC is continuing balance sheet normalization. 
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  • Bank of Canada cut interest rates for a fifth time in a row, by 50 bps to 3.25%, in line with market expectations. 
  • "With the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as 
    expected. Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook," Governor Macklem said. 
  • BOC said Q4 growth will be lower than projected, job market remains soft and reduced immigration will dampen growth in months ahead.
  • "Monetary policy no longer needs to be clearly in restrictive territory. We want to see growth pick up to absorb the unused capacity in the economy to keep inflation close to 2%."
  • BOC will be looking at core inflation to assess the trend in CPI after some tax breaks. "We expect the GST  holiday to temporarily lower inflation to around 1.5% in January, but that effect will be unwound after the GST break ends in mid-February. "
  • Macklem also said that US tariff threats are a "major new uncertainty". 
  • BOC is continuing balance sheet normalization.