Bank of Canada interest rate decision coming on Wednesday amid rate cut speculation

economy, interest rate, inflation

The Bank of Canada will announce its latest interest rate decision on Wednesday amid speculation that the central bank might start to cut rates.

On balance, financial markets expect the bank to cut its key lending rate by a quarter of a percentage point, but the view is by no means universal, with some expecting it to wait.

Bank of Canada governor Tiff Macklem has said a rate cut is within the realm of possibilities, but that the decision will be guided by the economic data. He has said the central bank is seeing what it needs to see, but wants to see it for longer to be confident that progress toward price stability will be sustained.

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The annual inflation rate for April came in at 2.7 per cent compared with 2.9 per cent in March.

The interest rate decision follows a report by Statistics Canada last week that showed economic growth in the first quarter fell short of the Bank of Canada’s expectations. The report also revised its reading for growth in the fourth quarter of 2023 lower.

However, the jobs report for April showed employment rose by 90,000 for the month and marked the largest employment increase in more than a year.

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