The Bank of Canada announced its third rate cut in a row, reducing its key policy rate by 25 basis points to achieve a 4.25% level.
“In Canada, the economy grew by 2.1% in the second quarter, led by government spending and business investment,” said the central bank in a press statement. “This was slightly stronger than forecast in July, but preliminary indicators suggest that economic activity was soft through June and July. The labor market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity.”
The Bank of Canada added that “inflation slowed further to 2.5% in July,” but added that “high shelter price inflation is still the biggest contributor to total inflation but is starting to slow.”
The third consecutive rate cut stands in stark contrast to the example of the Federal Reserve, which remains the only major Western central bank that has yet to cut rates in the post-pandemic economy. The Federal Reserve’s next meeting on rate policy takes place on Sept. 17-18, with many observers predicting a rate cut at that time.
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