OTTAWA – The Bank of Canada on Wednesday cut its benchmark rate by 50 basis points to 3.75 percent (one basis point is one hundredth of a percentage point). Here’s what people are saying about the decision:

“Inflation and high interest rates are placing a heavy burden on Canadians. With inflation now back on target and interest rates continuing to fall, families, businesses and communities should feel some relief. — Tiff Macklem, Governor of the Bank of Canada.

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“Activity in the Canadian real estate market has been sluggish in many regions due to rising borrowing costs, but today’s more drastic reduction in interest rates could quickly reverse the trend. For those with adjustable rate mortgages – who will immediately benefit from the rate cut – or those whose loan renewal is fast approaching, today’s announcement is indeed good news. — Phil Soper, President and CEO of Royal LePage.

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“This will not be the end of rate cuts. Even with the succession of policy cuts since June, rates remain far too high given the state of the economy. To better balance rates, we forecast an additional 150 (basis points) of cuts through 2025. So while the pace of future cuts is now very uncertain, the direction of rates is clearly downward. — James Orlando, director and senior economist at TD Bank.

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“The extent of the rate cut in December will depend on upcoming jobs and inflation data, but a 25 basis point cut remains our benchmark.” — Tu Nguyen, economist at insurance, tax and consulting firm RSM Canada.

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“The significant interest rate cut announced today is essentially a response to the sharp decline in headline inflation over recent months. However, underlying forecasts and the Bank’s moderate tone suggest that future default movements will be 25 basis points, unless growth and/or inflation surprise again on the downside.” — Douglas Porter, chief economist at the Bank of Montreal.

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“This reduction will not be the last. The level of the overnight rate is still restrictive at 3.75 percent and the Bank of Canada hinted in the press release that future rate cuts would follow to support a return to stronger GDP growth. — Claire Fan, economist at the Royal Bank of Canada.

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“The weak economic backdrop means we still have a strong case for the Bank of Canada to follow its larger 50 basis point cut today, which brought the policy rate to 3.75 percent, with another reduction by 50 basis points at the next meeting in December. We are in the minority, however, with markets pricing in a less than 10 percent chance of this happening.” — Stephen Brown, deputy chief economist for North America at Capital Economics.

This report by The Canadian Press was first published October 23, 2024.