The 25-basis-point cut brings the policy rate to 4.75%, and marks the first cut since the Bank of Canada kicked off this hike cycle in March 2022.Months of speculation came to a head on Wednesday when the Bank of Canada announced the first interest rate cut of the cycle. The long-awaited and much-anticipated move from the central bank was a decrease of 25 basis points, bringing the policy rate to 4.75%.
“With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive,” Governing Council said in aon Wednesday morning. “Recent data has increased our confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
“With the market pricing in more than a two-thirds chance of a cut, it would be a larger surprise at this point if rates aren’t eased in June,” Shenfeld said. “Clearly, investors are looking at the big picture. Four months of very tame inflation readings, likely better than what the BoC thought would be possible, fully meet the conditions for starting to ease up on policy rates that the Bank had communicated back in April.
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