Real Estate Blog

Bank of Canada Lowers Interest Rates to 3.75%

The Bank of Canada has reduced its policy interest rate by 50 basis points, bringing it down to 3.75%. This move is part of the Bank’s efforts to support economic growth while maintaining stable inflation.

Global Economic Outlook

Globally, the economy is expected to grow by around 3% over the next two years. The U.S. economy is performing better than anticipated, while growth in China remains slow. Europe has seen softer growth but is expected to improve in 2024. Inflation in advanced economies has decreased recently, aligning closer to central bank targets, and global financial conditions have eased as markets expect lower interest rates. Oil prices have also dropped by about $10 since July, contributing to lower costs worldwide.

Canadian Economic Trends

In Canada, the economy grew by 2% in the first half of the year, with growth expected to slow slightly to 1.75% in the latter half. While consumer spending has increased, it’s been declining on a per-person basis. The job market remains soft, with an unemployment rate of 6.5%. While population growth has expanded the labor force, job creation has been modest, particularly affecting younger workers and newcomers.

Looking ahead, the Bank expects gradual economic improvement. Lower interest rates should encourage consumer spending and residential investment, while business investment and exports, particularly to the U.S., are expected to remain strong.

Inflation and Future Rate Changes

Inflation has significantly decreased, dropping from 2.7% in June to 1.6% in September. While housing costs remain high, other areas have seen price declines, and core inflation is now below 2.5%. The Bank anticipates inflation will remain close to its 2% target over the next few years.

To support the economy further, the Bank’s Governing Council decided to cut rates, and they may reduce rates again depending on future economic conditions. Their goal is to keep inflation within the 1% to 3% range and maintain stable prices for Canadians.

The next rate announcement is scheduled for December 11, 2024, with a full economic update coming in January 2025.

If you have any questions about how this effects your buying or selling of property this fall, call us for more details. info@roccasisters.ca | 905.335.4102