Bank of Canada cuts key rate for first time in more than 4 years

The Bank of Canada announced Wednesday that it’s cutting its key interest rate by a quarter of a percentage point to 4.75 per cent.

The Bank of Canada has cut its overnight rate by 25 basis points, a move not seen since the beginning of the pandemic.

Wednesday’s announcement puts the policy rate at 4.75 per cent, down from the 5 per cent it has been sitting at since July of last year.

The bank began raising its key interest rate in March of 2022, following larger-than-expected inflation numbers that followed a period of pandemic stimulus and disrupted global supply chains.

The central bank now sees enough evidence that underlying inflation is easing at a sustainable level. The Canadian central bank will be the first to cut rates among its peers at the Bank of England, the European Central Bank and the United States Federal Reserve.

“We’ve come a long way in our fight against inflation,” said Bank of Canada Governor Tiff Macklem, during prepared remarks in Ottawa. “And our confidence that inflation will continue to move closer to the 2 per cent target has increased over recent months.”

CTVNews.ca will stream Macklem's news conference about the rate decrease LIVE at 10:30 a.m. ET.

The inflation rate was at 2.7 per cent in April, down from 2.9 per cent in March of this year. The economy grew by 1.7 per cent in the first quarter of 2024, below what the bank forecasted.