Bank of Canada cuts benchmark rate by 50 basis points
Adds quotes
TORONTO, Oct 23 (Reuters) -The Bank of Canada on Wednesday reduced its key benchmark rate by 50 basis points to 3.75%, its first bigger-than-usual move in more than four years, and hailed signs the country had returned to an era of low inflation.
MARKET REACTION: CAD/
LINK: https://www.bankofcanada.ca/2024/10/fad-press-release-2024-10-23/
COMMENTS
DARCY BRIGGS, PORTFOLIO MANAGER, FRANKLIN TEMPLETON CANADA
"The market was expecting this to happen and there are more substantial rate cuts to come as we expect will happen."
"If you look at the trajectory of real interest rates in Canada ... you had real rates increase which is a tightening of financial conditions, but the bank with the 50 basis points has brought it back down to where it needed to be and then eased a little bit more."
"We expected a 50 (basis-point cut). If the data continues to remain soft we would expect another 50 but terminal rate for the Bank of Canada is we expect in the low 2s (two percentage points)."
ROBERT BOTH, CANADIAN MACRO STRATEGIST AT TD SECURITIES
"Obviously the move itself wasn't what we were looking for. We thought the Bank of Canada was more likely to come down on the side of a 25-basis-point cut, but it does seem they are growing a little more concerned with excess supply working to reduce inflation across core goods and services. The bank also has downgraded its near-term growth outlook, expressing concern around labor markets. And now that they are dipping into this 50-basis-points territory, I think it does imply a lower threshold to continue easing by 50 basis points and get policy back to a neutral stance a little more quickly than we previously anticipated."
DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS
"No surprise at all in terms of the rate decision. The market was very heavily priced for a half-point cut. So that part of it largely stuck to the script."
"What caught my eye is that there's almost no net change in the economic forecast. When we look at the overall growth rates for this year and next - whether it's growth or inflation - it's basically as the Bank of Canada expected in July. Inflation is slightly lower, but we're talking tenths of a percent, and the growth forecast is essentially the same. So I'm not sure that this outsize cut sets a precedent. Looking ahead, it may well be the case that this is a bit of a one-off and that the bank now reverts back to quarter-point cuts, depending on how the economy fares in the months ahead."
Reporting by Fergal Smith, Anna Mehler Paperny and Ismail Shakil; Editing by Caroline Stauffer
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