Bank of Canada cuts key interest rate by 50 basis points

The Bank of Canada delivered a second consecutive interest rate cut of half a percentage point on Wednesday as cracks form in the Canadian economy.

The central bank’s policy rate now stands at 3.25 per cent after the fifth rate cut in a row.

The move was widely expected by markets and economists amid signs of a slowdown in Canada’s economy.

While inflation has returned to the Bank of Canada’s target of two per cent, the Canadian unemployment rate rose more than expected in November and real gross domestic product undershot the central bank’s most recent forecasts in the third quarter.

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The Bank of Canada is looking to stimulate growth in the Canadian economy to avoid inflation dropping too far below target.

The central bank’s policy rate broadly sets the cost of borrowing in Canada and is a key input for interest rates Canadians pay on their mortgages and other loans.

More to come…

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