Bank of Canada Governor Tiff Macklem holds a press conference at the Bank of Canada in Ottawa on Wednesday, Oct. 23, 2024. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA - The Bank of Canada cut its key policy interest rate by 50 basis points on Wednesday to bring it to 3.75 per cent (a basis point is equal to a one-hundredth of a percentage point). Here's what people are saying about the decision:

"High inflation and interest rates have been a heavy burden for Canadians. With inflation now back to target and interest rates continuing to come down, families, businesses and communities should feel some relief." — Tiff Macklem, Bank of Canada governor.

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"Activity in Canada’s housing market has been sluggish in many regions due to higher borrowing costs, but today’s more aggressive cut to lending rates could cause the tide to turn quickly. For those with variable rate mortgages – who will benefit from the rate drop immediately – or those with fast-approaching loan renewals, today’s announcement is welcome news indeed." — Phil Soper, president and CEO of Royal LePage.

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"This won't be the end of rate cuts. Even with the succession of policy cuts since June, rates are still way too high given the state of the economy. To bring rates into better balance, we have another 150 (basis points) in cuts pencilled in through 2025. So while the pace of cuts going forward is now highly uncertain, the direction for rates is firmly downwards." — James Orlando, director and senior economist at TD Bank.

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"The size of the December rate cut will depend on upcoming job and inflation data, but a 25 basis point cut remains our baseline." — Tu Nguyen, economist with assurance, tax and consultancy firm RSM Canada.

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"Today's outsized rate cut is mostly a response to the heavy-duty decline in headline inflation in the past few months. However, the underlying forecast and the Bank's mild tone suggest that the future default moves will be 25 bp steps, unless growth and/or inflation surprise again to the downside." — Douglas Porter, chief economist at Bank of Montreal.

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"The reduction won’t be the last one. The level of the overnight rate is still restrictive at 3.75 per cent and the BoC in the press release hinted at future rate cuts will follow to support a return to stronger GDP growth." — Claire Fan, an economist at Royal Bank of Canada.

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"The weak economic backdrop means we still see a strong case for the Bank of Canada to follow its larger 50bp cut today, which took the policy rate to 3.75 per cent, with another 50bp cut at the next meeting in December. We are in the minority, though, with markets pricing in less than a 10 per cent chance of that move." — Stephen Brown, deputy chief North America economist at Capital Economics.

This report by The Canadian Press was first published Oct. 23, 2024.

News from © The Canadian Press, 2024