The Bank of Canada’s decision to cut its key interest rate by a whopping half a percentage point is welcome news for Canadians who have struggled under higher borrowing costs and punishing inflation.
While the rate cut can be seen as a positive sign that inflation has been brought under control, earlier historical periods that saw the rate lowered by 50 basis points in response to economic turmoil could indicate other considerations as well.
The central bank on Oct. 23 reduced its key interest rate for the fourth time in 2024, bringing it down from 4.25 percent to 3.75 percent. Bank of Canada governor Tiff Macklem said the bank took a “bigger step” to cut the rate because “inflation is now back to the 2 percent target and we want to keep it close to the target.”…