ANALYSIS: With Interest Rate Now at 4.25 Percent, How Might Future Cuts Unfold?

Although the Bank of Canada decided to cut interest rates for a third time in 2024 in response to lower inflation, governor Tiff Macklem warned that the country is not out of the woods yet. At the announcement on Sept. 4, Macklem said inflation fell to 2.5 percent in July, getting closer to the central bank’s target of 2 percent, and as such the bank decided to cut its key interest rate from 4.5 to 4.25 percent. However, Macklem said shelter price inflation remains “too high” and is still the largest contributor to overall inflation in Canada. At the previous two rate-lowering announcements, in June and July, the governor had also said the country’s housing supply and prices could keep inflation elevated....