Monetary Policy Statement issued by the Bank of Canada - November 2024

The Bank of Canada has lowered its interest rate target by 50 basis points to 3.25%, while keeping the rate on banks at 3.75% and the deposit rate at 3.25%. The key points in the monetary policy statement are:

• The bank continues its policy of normalizing the balance sheet.
• The global economy is evolving as expected, with:
• A strong U.S. economy, with robust consumption and a strong labor market.
• Weaker growth in the Eurozone.
• Growth in China supported by policy measures and strong exports, although household spending is weak.
• Easing global financial conditions and a decline in the value of the Canadian dollar.
• In Canada:
• GDP growth in the third quarter was 1%, below expectations, with weak business investment, inventories, and exports.
• Consumer spending and housing activity have increased, indicating the effect of lower interest rates.
• The unemployment rate rose to 6.8% in November, with employment growth slowing compared to the labor force.
• Wage growth remains high, although signs of easing are appearing.
• Policy measures affecting growth and inflation expectations:
• A reduction in immigration is expected to lower GDP growth next year.
• Federal and provincial policies, such as a suspension of the goods and services tax and one-time payments, are affecting demand and inflation.
• Increased uncertainty regarding potential U.S. tariffs on Canadian exports.
• The consumer price index inflation is around 2%, and is expected to remain close to the target over the next two years.
• Inflationary pressure has softened and commodity prices have contracted.
• The temporary goods and services tax holiday will reduce inflation, but the effects will dissipate once it ends.
• The Bank of Canada has significantly cut interest rates since June to support growth and keep inflation within the target range of 1-3%.
• Future price decisions will depend on incoming data and inflation expectations.
• The bank remains committed to maintaining price stability for Canadians with a 2% inflation target.