Bank of Canada Cuts Interest Rates to 4.50%

Citing Cooling Inflation, Bank Governor Hints at More Rate Cuts

OTTAWA, June 5 (Reuters) - The Bank of Canada trimmed its key policy rate on Wednesday, becoming the first G7 country to do so. This widely expected move will ease the cost of borrowing for businesses and consumers.

The Bank of Canada's policy rate now stands at 4.75%, down from 5.00%. This marks the first rate cut since October 2022, when the central bank embarked on an aggressive tightening cycle to combat soaring inflation.

In a statement, the Bank of Canada cited cooling inflation as a key reason for the rate cut. The central bank noted that inflation has moderated in recent months, falling from a peak of 8.1% in June 2022 to 6.3% in April 2023.

Bank Governor Tiff Macklem also hinted that more rate cuts could be on the horizon. He said that the central bank is "prepared to adjust its monetary policy stance as needed to achieve its inflation target of 2%."

The Bank of Canada's rate cut is seen as a positive sign for the Canadian economy. Lower interest rates will make it cheaper for businesses to invest and for consumers to borrow money.