How Today's Bank of Canada Announcement Impacts You

Today, September 4, 2024, the BoC reduced its target for the overnight rate by a further 0.25% to 4.25%.

Today’s rate drop is a full 75 basis points (or 0.75%) below its peak of 5.00%.

What prompted this further drop of 0.25% by the BoC?
Encouraging inflation data and signs of a slowing economy have given the BoC the green light to move forward with its steady pace of monetary policy easing.

This is great news for clients with a variable rate mortgage as they can expect that Prime will drop a further 0.25% to 6.45% and thus reduce their mortgage rates.

GDP grew by 2.1% in the second quarter and this was slightly stronger than forecast by the BoC in July.

The labour market continues to slow, but wage growth remains elevated relative to productivity.

Inflation slowed further to 2.5% in July down from 2.70% in June.

High shelter price inflation is still the biggest contributor to total inflation but is starting to slow and Inflation also remains elevated in some other services.

The Bank remains resolute in its commitment to restoring price stability for Canadians.

The next scheduled date for announcing the overnight rate target is October 23rd, 2024.