The latest on Bank of Canada’s Oct. 23 interest rate decision
The Bank of Canada’s rate announcement is at 9:45 am ET. The central bank is widely expected to cut its benchmark interest rate by half a percentage-point to 3.75 per cent. That would follow three quarter-point moves, and hasten the bank’s efforts to get borrowing costs back to a more normal level in response to retreating inflation and slow economic growth.
The bank will also publish a new quarterly economic forecast. Governor Tiff Macklem and senior deputy governor Carolyn Rogers will hold a press conference at 10:30 a.m.
Further reading:
- A recent history of Bank of Canada’s interest rate decisions
- How a Bank of Canada rate cut will affect mortgages and other debt payments
Find updates from our reporters and columnists below.
7 a.m.
Bank of Canada expected to accelerate easing
Governor of the Bank of Canada Tiff Macklem participates in a news conference on the bank’s interest rate announcement, in Ottawa, Sept. 4, 2024. Analysts and investors have coalesced around the idea that the bank will lower its policy interest rate by half a percentage point to 3.75 per cent on Oct. 23.Justin Tang/The Canadian Press
The Bank of Canada has been lowering interest rates gradually since June, delivering three back-to-back quarter-point rate cuts. That could change this morning.
Financial markets and Bay Street analysts widely expect the central bank to announce a half-point cut at 9:45 a.m. ET. That would bring the policy rate to 3.75 per cent and accelerate the bank’s push to get borrowing costs back down to a normal level after one of the biggest run-ups in interest rates on record.
Rate cuts are never a sure thing. But the case for bringing borrowing costs down quickly is building.
The annual rate of inflation hit the central bank’s 2-per-cent target in August for the first time since 2021, then fell to 1.6 per cent in September. Not only is inflation no longer a menace, monetary policy makers are growing concerned that it could get stuck below the 2-per-cent target if the economy doesn’t start picking up steam.
GDP growth has undershot the Bank of Canada’s forecast in the third-quarter, unemployment is up sharply over the past two years and consumers and businesses remain downbeat. All this suggests that the current level of interest rates – which are at least a percentage point above what the bank considers to be neutral – are far too restrictive for this point in the economic cycle.
There are risks to cutting interest rates too quickly. Housing prices could take off again, especially in light of changes to federal mortgage rules that come into force in December. And more aggressive easing by the Bank of Canada relative to the U.S. Federal Reserve could weaken the Canadian dollar.
Alongside its rate announcement, the central bank will release an updated forecast for inflation and GDP growth. Governor Tiff Macklem and senior deputy governor Carolyn Rogers will hold a press conference at 10:30 a.m.
Read more about today’s Bank of Canada announcement.