As expected, the Bank of Canada has cut its key lending rate by a quarter of a percentage point. The rate began the day at 5.0 but is now 4.75.
Bank of Canada Governor Tiff Macklem says they have more confidence that inflation is moving closer to the central bank’s two per cent target, citing various indicators that suggest price pressures have retreated.
The cut, the first in about four years, means it will cost less to borrow money for things such as mortgages and car loans.
A quarter of a percentage point doesn’t sound like much, but one local financial advisor says the Bank of Canada’s decision to lower interest rates for the first time in four years is an important signal.
Senior Advisor with Short Financial/IA Private Wealth, Larry Short says the bank’s decision to lower rates is significant.
“What’s significant is that it’s a signal to the markets that interest rates are going to be lower in the future.”