OTTAWA — Forecasters expect the Bank of Canada to speed up the pace of interest rate cuts and lower its policy rate by half a percentage point this week.
The central bank's interest rate announcement on Wednesday comes after Statistics Canada reported the annual inflation rate in September tumbled to 1.6 per cent — below the Bank of Canada's two per cent inflation target.
After the Bank of Canada's interest rate cut last month, governor Tiff Macklem signalled that the central bank will be ready to cut rates more aggressively if inflation falls by too much.The Bank of Canada has lowered its key interest rate three times so far, bringing it down to 4.25 per cent. Although the Canadian economy has continued to grow modestly, real gross domestic product has shrunk on a per-capita basis for five consecutive quarters.
The parliamentary budget officer projected in its recent economic and fiscal outlook that the central bank will continue cutting rates until its policy rate reaches 2.75 per cent in the second quarter of 2025. The U.S. annual inflation rate fell to 2.4 per cent in September while the Federal Reserve's policy rate sits at 4.75 to five per cent.
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