Mortgage Blog
Bank of Canada Rate Announcement - October 23, 2024
October 23, 2024 | Posted by: Ken Fadel
As widely expected, the BoC reduced its target for the overnight rate by 50 bps this morning to 3.75%.
Our economy grew at around 2% in the first half of 2024 and is expected to grow by about 1.75% in the second half of the year. Personal consumption continues to grow but a declining rate. The labour market remains soft with the unemployment rate coming in at 6.5% for September. Population growth has continued to expand the labour force while hiring has not kept up the pace. Overall, the BoC forecasts GDP growth of 1.2% this year, 2.1% in 2025, and 2.3% in 2026.
CPI inflation has dropped significantly from 2.7% in June to 1.6% in September. While shelter cost inflation remains elevated it is showing signs of easing. The BoC expects inflation to remain close to its target over the foreseeable future, with upward and downward pressures roughly balancing out.
With inflation now back around the 2.00% target, the BoC decided to reduce the policy rate to support economic growth and keep inflation close to the middle of its target range. If the economy continues to evolve as forecasted, they expect to reduce the policy rate further. The timing and pace of any further reductions will be guided the inflationary outlook. The Bank remains resolute in its commitment to maintaining price stability for Canadians.
The next rate announcement is scheduled for December 11, 2024.