OTTAWA — The Bank of Canada lowered its key interest rate by half a percentage point today but signalled a slower pace of rate cuts moving forward.
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The decision marked the fifth consecutive reduction since June and brings the central bank’s key rate down to 3.25%.
Forecasters were widely expecting the jumbo interest rate cut after the November labour force survey showed the unemployment rate rose to 6.8%.
Governor Tiff Macklem says in his prepared statement that the central bank opted for two large rate cuts in a row because inflation and economic growth don’t need to be restricted anymore.
With inflation back at the 2% target, the central bank is now focused on keeping it there.
However, with interest rates now down substantially, Macklem signalled the central bank will likely take a more gradual approach to monetary policy.