The Bank of Canada has decreased its policy interest rate for the second consecutive time. The 25 basis points reduction brings the overnight rate to 4.5 per cent, returning to levels not seen since June 2023. Last month’s cut from 5 per cent to 4.75 per cent was the first in more than four years.

The decision was based on economic data showing slack in the labour market, excess supply in the economy and inflation continuing to drop. Since the Bank of Canada started raising rates in March 2022 inflation has dropped from a peak of 8.1 per cent in June 2022 to 2.7 per cent in June 2024, after a slight increase in May.