Bank of Canada Cuts Rates 0.25% – Sept 2024

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Here are the highlights:


Interest Rate Cut:
-Bank of Canada cuts interest rates by 0.25%, lowering Prime Rate from 6.7% to 6.45%, the third consecutive cut.


Economic Indicators:
-inflation has slowed to lowest level in 3 years at 2.5% annualized 
-Employment declined for the second consecutive month
-Q2 GDP grew by 2.1% annualized with population growth at 3.2% (population growth continues to inflate economic growth).


Job Market:
-Canada has been losing jobs
-unemployment at 6.4%
-recent job reports typical of recession.


Population Growth:
-Canada now ranks among the fastest growing countries for population growth
-Our population grew by a record 1.3million people last year, pressuring infrastructure & house supply


Forecasts:
-Big banks forecast further rate cuts:0.25% – 0.5% in cuts for this year.
-Total of 1.25% – 1.75% cuts by the end of 2025.


Next Bank of Canada Meeting:Scheduled for October 23, 2024
The Bank of Canada has CUT interest rates 0.25% this morning for a third consecutive meeting.  This lowers Prime Rate from 6.7% to 6.45% & directly reduces variable rate mortgages & lines of credit. 


This was widely expected after July’s inflation dropped to the slowest level in 3 years at 2.5% annualized & employment declined for a second consecutive month.
 



The sole blip of good news this summer was the better than expected GDP print for Q2.  The economy grew at an annualized pace of 2.1% for the quarter BUT this was all due to continued record population growth.  We increased the number of Canadians by 3.2% while the economy grew 2.1% – losing ground!





There has been A LOT more interest in variable rates over the summer for obvious reasons.  Prime has dropped by 0.75% since June.  What hasn’t changed though is being able to secure roughly 1% lower rates going fixed. 


With inflation very close to target & the economy slowing, more rate cuts are sure to come BUT how many & the pace is the big question.  This is a nuanced discussion that I LOVE having so if your mortgage is coming up for renewal this year, or you’re looking to buy, get in touch today!







The next Bank of Canada meeting is October 23rd.​

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