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Bank of Canada Rate Announcement October 2024
Bank of Canada Rate Announcement October 2024
Date Posted: October 23, 2024
The Rate Announcement
In a recent widely expected announcement, the Bank of Canada has reduced its target overnight rate to 3.75%, a decrease of 0.50%. This decision is part of the Bank's ongoing strategy to normalize its balance sheet, following their previous decrease in September 2024.
In Canada, economic growth was around 2% in the first half of the year, with a projected 1.75% growth in the second half. While consumer spending continues to rise, it is declining on a per capita basis. The Trans Mountain Expansion pipeline has boosted exports. However, the labor market remains soft, with an unemployment rate of 6.5% in September. Population growth has increased the labor force, but job creation has been modest, particularly affecting younger workers and newcomers.
What Does This Impact?
The Bank of Canada’s target overnight policy rate affects the interest you pay from lenders like banks. The higher the overnight rate, the more interest you will pay. The October 2024 drop from the Bank of Canada means that variable and adjustable mortgage holders will see a decrease in their interest costs and possibly a decrease in their mortgage payments. Fixed rate mortgages are not as directly impacted by the BOC rate announcement, however the bond markets which influence fixed rates have largely already built in the expected 0.50% rate drop.
Getting Back on Track
The Bank expects inflation to remain close to its target as both upward and downward pressures balance out. In light of current economic conditions, the policy rate has been reduced by 50 basis points to stimulate growth and maintain inflation within the 1% to 3% range. Future rate adjustments will be made based on ongoing economic assessments.
The Bank of Canada is dedicated to ensuring price stability for Canadians by keeping inflation close to its 2% target.
The next rate announcement will be on December 11th 2024.
If you have questions about your own mortgage, and the best strategy for you, please contact your broker today.
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