The Bank of Canada cut its key lending rate for the third time today, bringing it to 4.25 percent.
The reduction was widely anticipated due to ongoing softness in the economy and easing inflation.
Bank Governor Tiff Macklem said the decision was based on two key factors. “First, headline and core inflation have continued to ease as expected,” he noted. “Second, as inflation moves closer to the target, we want to see economic growth pick up to absorb the slack in the economy so inflation can return sustainably to the two percent target.”
Although the economy grew faster than expected in the second quarter, preliminary data for June and July suggested a slowdown in economic activity.
Macklem added that if inflation continues to ease as anticipated, it is “reasonable” to expect additional rate cuts.
