More good news from the Bank of Canada if you have a loan to pay back.
The bank announced Wednesday it is cutting its key interest rate by 50 basis points to 3.75 per cent, marking the fourth consecutive drop.
Governor Tiff Macklem told reporters that inflation has returned to the two per cent target.
“Price pressures are no longer broad-based, and both our measures of core inflation are now under 2.5 per cent,” said Macklem.
“Our surveys also find that business and consumer expectations of inflation have shifted down and are nearing normal. All this suggests we are back to low inflation.”
Macklem said their focus now is to maintain low and stable inflation over the coming months.
Household spending and business investment remain soft, he said, which has helped to lower inflation.
Now that inflation is back to the two per cent target, Macklem said they want to see growth strengthen — something the lower interest rate should help do.
“The upward pressure from shelter and other services is expected to gradually diminish. With stronger demand, the downward pressure on inflation is also forecast to dissipate, keeping the upward and downward forces roughly balanced,” he said.
“If the economy evolves broadly in line with this forecast, we anticipate cutting our policy rate further to support demand and keep inflation on target.”
The key interest rate is a reference point that financial institutions use to set interest rates for things like mortgages and loans.
The next update from the Bank of Canada will be in December.
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