Canada’S Central Bank Cuts Interest Rates Amid Inflation Control

(MENAFN- The Rio Times) Canada's central bank has taken a significant step by reducing its key interest rate by half a point to 3.75%. This move promises greater relief for borrowers and signals success in the fight against inflation.

For nearly a year, Canada maintained its benchmark rate at 5.0%, the highest level in two decades, before initiating cuts in early June. Canada became the first G7 nation to lower rates following a prolonged inflation period.

After three consecutive quarter-point reductions, most analysts anticipated a more aggressive approach for the October announcement. Recent figures showed inflation dropping below 2%, prompting this decisive action.

"Today, we took a significant step because inflation has returned to our 2.0% target, and we aim to keep it there," stated Tiff Macklem, Governor of the Bank of Canada, during a press briefing.

Macklem highlighted that extensive data indicates a return to low inflation. The central bank 's goal now is to maintain stable, low inflation and achieve an economic "soft landing."



The bank also expressed readiness to further reduce rates if the economy aligns with its forecast. However, Macklem cautioned that they remain equally concerned about inflation deviating above or below expectations.

Avery Shenfeld, an analyst with CIBC Economics, remarked that Wednesday's substantial rate cut was an obvious decision given the circumstances.

James Orlando, a senior economist at TD Bank, commented that "rates remain too high given the state of the economy" and predicted additional cuts in the future.

This strategic move by Canada's central bank underscores its commitment to stabilizing inflation while providing economic relief, marking a pivotal moment in its monetary policy approach.

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