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The Bank of Canada is expected to announce a 50 basis point cut to its key policy rate on Wednesday, responding to recent data on Inflation, growth, and unemployment that point to the need for swift relief for consumers and businesses. This move would mark the Central bank‘s first significant rate reduction in over 15 years outside of pandemic circumstances and the fourth consecutive cut, following the lead of the U.S. Federal Reserve.
With Consumer prices in Canada slowing, GDP growth remaining sluggish, and signs of cooling wage Inflation, the Bank of Canada faces a weaker economic outlook than initially anticipated. Despite robust job numbers, the Central bank has already reduced the benchmark rate to 4.25% over recent months.
As expectations of a 50 basis point cut rise, economists are keen to see revisions to Inflation, growth, and consumption figures in the upcoming Monetary Policy Report. While some believe a larger rate cut is warranted, others argue for a more measured approach to interest rate adjustments.
The decision, along with fresh economic forecasts, will be announced at 9:45 a.m. ET. In a Reuters poll, two-thirds of economists predict a 50 basis point rate cut to 3.75%, with currency swap markets pricing in a high probability of this outcome.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
