From Morningstar: 2024-06-05 13:26:00

After six pauses, the Bank of Canada cuts its target for the overnight rate to 4.75% to continue balance sheet normalization. Governor Tiff Macklem emphasizes progress in the fight against inflation, with confidence in moving closer to the 2% target.

The Bank of Canada notes a steady supply of workers helping to cool wage pressures and inflation. While inflation remains above 2%, the bank sees progress toward easing price pressures. Investor doubts about a June rate cut have lessened with the economy picking up.

The decision to cut rates signals concern over a slowdown in domestic activity. Reduced wage pressures may help cool high prices, but fears of home price increases remain. BoC aims to balance monetary policy for sustained growth towards the 2% inflation target.

Internationally, the Bank of Canada monitors U.S. developments, predicting a return to normal inflation levels with economic growth easing. Inflation impacts from supply chain resolutions and growth slowdown are expected to moderate.

With hope for easing inflation, future rate cuts in Canada are possible if inflation continues to decline. Bank emphasizes taking rate decisions one meeting at a time. Optimism surrounds potential cuts if inflation eases towards the 2% target.



Read more at Morningstar: Bank of Canada Cuts Interest Rates