The Bank of Canada lowers its key interest rates by 0.25 percentage points.
The central bank increased interest rates multiple times due to high inflation, reaching levels not seen in 22 years. They hadn't changed the rate in almost a year. In April, inflation finally went down to 2.7% annually, its lowest point in three years.
While the interest rate decrease wouldn't greatly impact Canadian borrowing costs, it could potentially revive the economy. In the first quarter, economic growth was only 1.7%, lower than predicted. Nevertheless, the central bank was cautious, stating that "inflation outlook is still uncertain" and that they'd "keep a close eye on future developments." The next monetary policy decision is slated for July 24.
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The decision to lower the key interest rate by 0.25 percentage points was made by the Bank of Canada, based in Ottawa. This move comes after a year without any changes in the interest rate. The Coronavirus pandemic and its impact on the economy might have influenced this decision. Although the decrease in key interest rates might not significantly affect Canadian borrowing costs, it could stimulate economic growth, which has been sluggish, with a growth rate of 1.7% in the first quarter. Inflation, however, remains a concern for the central bank, with an uncertain outlook and a percentage point lower than its peak in recent years. The Bank of Canada will closely monitor future developments before making any further decisions on key interest rates, scheduled for July 24.
