The Bank of Canada is preparing for a new cut in the key interest rate by 50 basis points, marking the first significant reduction after the pandemic period in over 15 years.

The expected cut aims to stimulate economic growth as consumer and business spending remains weak amid declining inflation. This move is expected to reduce the benchmark interest rate to 3.75% from 4.25%, reflecting similar actions by other central banks such as the U.S. Federal Reserve.

Bank of Canada Governor Tiff Macklem hinted in a press statement at the need for larger cuts to prevent unwanted economic contraction and declining inflation.

Experts anticipate these economic adjustments, with the likelihood of growth expectations falling below previous estimates.

The upcoming monetary policy report reveals new data and forecasts that reflect the bank's acknowledgment of weak economic performance.