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05/06/24
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CAD Lower After Bank of Canada Cuts Rates
On Wednesday, the Bank of Canada cut interest rates and the Canadian dollar lost ground against the US dollar. USD/CAD traded at about 1.3713, 0.28% higher in the North American session.
The Bank of Canada cut interest rates for the first time in more than 4 years and lowered the cash rate to 4.75%, 0.25% lower. The BoC is the second major central bank to cut rates, after the Swiss National Bank’s March cut.
The BoC statement said the cut was made as underlying inflation was still declining and that BoC members were happy that inflation would continue moving towards their target of 2%.
The statement also noted that economic growth in the first quarter was lower than expected. The BoC warned at the same time that there were still risks to the inflation outlook and that it would keep monitoring core inflation closely.
Governor Macklem didn’t say much about future policy. Macklem said in remarks prepared for a news conference that the BoC would make decisions about rates one meeting at a time and that further rate cuts were likely if inflation continued to drop. Macklem may perhaps provide more insights at the press conference later today.
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