Five key questions relating to the Bank of Canada’s latest rate cut
By: David Larock, July 21, 2015
Last week the Bank of Canada (BoC) lowered its overnight rate from 0.75% to 0.50% in an effort to counteract downside risks to inflation and weaker-than-expected overall economic growth.
The Bank also downgraded its projections for GDP growth to “just over 1% in 2015 and about 2 ½ per cent in 2016 and 2017”, and now projects that “the economy will return to full capacity and inflation to 2 per cent on a sustained basis in the first half of 2017”. Reading between the lines, that means that the Bank doesn’t expect to raise its overnight rate for about another two years.
In today’s post I’ll address five key questions relating to the BoC’s latest rate drop:
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