Bank of Canada finally drops their rate by 0.25%. Inflation in most advanced economies continues to ease. The Bank’s preferred measures of core inflation suggest continued downward momentum. However, they state recent data suggest the economy is still operating in excess supply. Shelter price inflation remains high and housing activity increased. Wage pressures remain but look to be moderating gradually.

The closing statement paints their sentiment: “With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target.”

Canada is more sensitive to interest rate than the US, so today’s move before the US is understandable. The stage is set for further rate drops, however, slow and steady pace is more reasonable to expect over fast, drastic deep cuts.

Next BoC meeting is July 24, 2024. US Fed will make their next rate announcement June 12, 2024.