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Third Straight Cut In A Row, More Can Be Justified As Inflation Slows

BOC
  • The Bank of Canada cut interest rates for a third time in a row by 25 bps to +4.25%. This was in line with market expectations. 
  • BOC says more cuts can be justified if inflation continues to ease. There has been a broad slowdown in prices so far.
  • Governor Macklem says that with inflation getting closer to target, "we need to increasingly guard against the risk that the economy is too weak and inflation falls too much." 
  • "We are determined to get inflation down to the 2% target, and we want it to stay there. We care as much about inflation being below the target as we do above. The economy functions well when inflation is around 2%."
  • BOC sees growing weakness in the job market with little employment change in recent months. 
  • Inflation is expected to ease further in the months ahead according to BOC. Some upside pressure from shelter and some other services.
  • Bank sees some signs growth in the second half of this year may lag its forecast.
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