Mortgage Blog
Bank of Canada Rate Announcement - December 11, 2024
December 11, 2024 | Posted by: Crescent Mortgage Corp.
This morning the BoC reduced its target for the overnight rate by 50 bps to 3.25%. This drop was widely expected after the release of weak labour data for November.
The economy only grew by 1% in the third quarter, well below the BoC’s October projection, and the fourth quarter also looks to be weaker than projected. GDP growth was pulled down by reductions in business investment, inventories and exports. In contrast, both consumer spending and housing activity showed signs of recovery, suggesting lower rates are beginning to boost household spending. The possibility that the incoming US administration will impose new tariffs on Canadian exports has increased uncertainty and clouded the economic outlook going forward.
CPI inflation has remained around about 2% since the summer and is expected to stay at that level over the next couple of years. The policy rate has dropped substantially since June, and the BoC has stated they anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected. The BoC reiterated its commitment to maintaining price stability for Canadians by keeping inflation close to the 2% target.
The next interest rate announcement is scheduled for January 29, 2025 at which time the BoC will also issue its full outlook for the economy and inflation.