Bank of Canada JUMBO cut – 0.5%

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Here are the highlights:

  • Interest Rate Cut:
    • Bank of Canada cuts interest rates by 0.5%, lowering Prime Rate from 6.45% to 5.95%, the fourth consecutive cut.
    • This brings the total rate cuts to 1.25% since June.
  • Economic Indicators:
    • inflation FINALLY within the target range of 2-3% (Sept came in at 1.6%)
    • Employment  still declining on a per capita basis
    • GDP in the back half of 2024 expected to be 1.75%
  • Job Market:
    • Canada gained jobs last month but still not keeping pace with population growth
    • Unemployment is 6.5%
    • ​Young Canadians & newcomers being most impacted by the poor job market
  • Forecasts:
    • Big banks forecast further rate cuts:
      • December rate cut likely
      • Total of 1.25% cuts by the end of 2025.
  • Next Bank of Canada Meeting:
    • Scheduled for December 11th, 2024

Big news out of the Bank of Canadathis morning.  Tiff & his merry band of bankers have followed the US Fed with a 0.5% rate cut.  That brings a total of 1.25% since June & isn’t to be the last.

While a jumbo cut is welcomed news to borrowers, the not so great reality is that they wouldn’t be doing that if things were rock & rolling.

In the release The Bank noted subdued GDP growth in the 2nd half of this year, slightly better for next, but well below the expected 3% global growth.  Declining consumption on a per person basis & soft labour market with unemployment running at 6.5% are clear signs the stifling interest rate environment are too restrictive.

t 6.5% are clear signs the stifling interest rate environment are too restrictive. 

Inflation has finally subsided to fall within the acceptable range with last month’s print coming in at 1.6%, but don’t count inflation totally out for dead.  Commodity prices picked up surrounding the US FED’s somewhat surprising jumbo rate cut last month & bond yields overall being higher than the summer.

There is 1 more rate meeting to close out the year coming up in Dec.  The market is expecting another 1% in cuts by the end of next year.


The next Bank of Canada meeting is ​December 11th, 2024