Bank of Canada ‘justified’ in a half-point rate cut – here’s why

After making modest 25-basis-point cuts in the first three reductions of its interest rate cycle, many economists expect the Bank of Canada to take a more significant step down in its decision on Wednesday.

The central bank’s policy rate currently stands at 4.25 per cent, following a quarter-point cut earlier in September.

However, much has shifted in Canada’s economic landscape since then.

One major factor is that inflation appears well under control, dropping from a precise aim at the Bank of Canada’s two per cent target to 1.6 per cent in the most recent data.

Tiff Macklem, governor of the central bank, has emphasised in recent speeches that the Bank is just as concerned about inflation falling too far below two per cent as it is about inflation staying too high.

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