Governor Tiff Macklem held a press conference on Wednesday, after the Bank of Canada lowered its benchmark interest rate by a quarter-percentage point, marking a significant turning point in the central bank’s efforts to tame inflation.
The Bank of Canada’s policy rate now stands at 4.75 per cent following six consecutive holds in previous meetings.
Homeowners with variable-rate mortgages, as well as Canadians with other kinds of debt tied to the central bank’s policy rate, will immediately see their interest rates drop by 25 basis points. Macklem said that the “considerable progress” made in taming inflation should be “welcome news” to Canadians.
Macklem said that if inflation continues to ease, “it is reasonable to expect further cuts to our policy interest rate.” But he added that the central bank would take its decisions “one meeting at a time.”
As the Bank of Canada expects inflation’s journey back to two per cent will be “gradual,” Macklem said the pace of rate cuts will likely be the same. In other words, Canadians should not expect the path interest rates took on the way up – the most rapid tightening cycle in the Bank of Canada’s history – to be the same pace at which the central bank lowers rates.
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