Bank of Canada Cuts Key Interest Rate to 4.25%

In a move that has been widely anticipated by economists, the Bank of Canada has lowered its key interest rate to 4.25 percent. This marks the third consecutive rate cut since June, reflecting the central bank's ongoing response to the continued easing of inflation.

Bank of Canada Governor Tiff Macklem addressed the decision during a news conference on Wednesday, stating, "If we need to take a bigger step, we're prepared to take a bigger step. At this point, 25 basis points looked appropriate."

This rate cut follows a pattern established earlier this summer, with the central bank reducing rates to 4.75 percent in June and 4.5 percent in July. The gradual pace of these cuts has led some to question when a more dramatic move might be warranted.

Macklem emphasized that the decision considered various risks that could impact inflation rates. While prices for housing, shelter, and other services continue to exert upward pressure on inflation, these forces have "eased slightly" since the last rate cut in July.

Despite these adjustments, inflation is moving closer to the Bank of Canada's target of two percent, although the economy still has some distance to cover. The central bank remains vigilant and prepared to take further action if necessary to maintain economic stability and achieve its inflation goals.

As the Bank of Canada continues to navigate the complexities of the current economic landscape, these incremental rate cuts signal a cautious yet proactive approach to managing inflation and supporting economic growth.