MNI BRIEF: Text of Bank Of Canada Interest-Rate Decision

OTTAWA—The Bank of Canada today reduced its target for the overnight rate to 3.75%, with 

the Bank Rate at 4% and the deposit rate at 3.75%. The Bank is continuing its policy of balance 

sheet normalization.



The Bank continues to expect the global economy to expand at a rate of about 3% over the next 

two years. Growth in the United States is now expected to be stronger than previously forecast 

while the outlook for China remains subdued. Growth in the euro area has been soft but should

recover modestly next year. Inflation in advanced economies has declined in recent months, and 

is now around central bank targets. Global financial conditions have eased since July, in part

because of market expectations of lower policy interest rates. Global oil prices are about $10 

lower than assumed in the July Monetary Policy Report (MPR).



In Canada, the economy grew at around 2% in the first half of the year and we expect growth of 

1.75% in the second half. Consumption has continued to grow but is declining on a per person 

basis. Exports have been boosted by the opening of the Trans Mountain Expansion pipeline. The 

labour market remains soft—the unemployment rate was at 6.5% in September. Population 

growth has continued to expand the labour force while hiring has been modest. This has 

particularly affected young people and newcomers to Canada. Wage growth remains elevated 

relative to productivity growth. Overall, the economy continues to be in excess supply.



GDP growth is forecast to strengthen gradually over the projection horizon, supported by lower 

interest rates. This forecast largely reflects the net effect of a gradual pick up in consumer 

spending per person and slower population growth. Residential investment growth is also 

projected to rise as strong demand for housing lifts sales and spending on renovations. Business 

investment is expected to strengthen as demand picks up, and exports should remain strong,

supported by robust demand from the United States.



Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026. As 

the economy strengthens, excess supply is gradually absorbed.



CPI inflation has declined significantly from 2.7% in June to 1.6% in September. Inflation in

shelter costs remains elevated but has begun to ease. Excess supply elsewhere in the economy 

has reduced inflation in the prices of many goods and services. The drop in global oil prices has 

led to lower gasoline prices. These factors have all combined to bring inflation down. The 

Bank’s preferred measures of core inflation are now below 2.5%. With inflationary pressures no 

longer broad-based, business and consumer inflation expectations have largely normalized.



The Bank expects inflation to remain close to the target over the projection horizon, with the 

upward and downward pressures on inflation roughly balancing out. The upward pressure from 

shelter and other services gradually diminishes, and the downward pressure on inflation recedes 

as excess supply in the economy is absorbed.



With inflation now back around the 2% target, Governing Council decided to reduce the policy 

rate by 50 basis points to support economic growth and keep inflation close to the middle of the 

1% to 3% range. If the economy evolves broadly in line with our latest forecast, we expect to 

reduce the policy rate further. However, the timing and pace of further reductions in the policy 

rate will be guided by incoming information and our assessment of its implications for the 

inflation outlook. We will take decisions one meeting at a time. The Bank is committed to 

maintaining price stability for Canadians by keeping inflation close to the 2% target.



Information note: The next scheduled date for announcing the overnight rate target is December 11, 2024. The 

Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on January 29, 2025.