Canada's Bank deliberations reveal a "difficult decision" regarding a 50 basis point interest rate cut

The summary clarified that the bank's governing council discussed inflation risks in the face of indicators of slowing economic growth, ultimately deciding to proceed with the significant cut.

The summary noted that "each member of the governing council acknowledged that the decision was difficult based on their assessments of the data and growth and inflation prospects." The available data was conflicting, showing some evidence of increased household spending, but with weaknesses in the overall growth outlook.

The Consumer Price Index (CPI) rose from 1.6% in September to 2.0% in October, due to base effects from gasoline prices. The council indicated that the recent increase in core inflation was a result of fluctuations in the prices of certain goods and services, with the possibility that the temporary suspension of the goods and services tax contributed to short-term volatility.

What about interest rate expectations in 2025?

Economists expect the pace of interest rate cuts at the Bank of Canada to slow down in 2025, and to stop soon. According to recent deliberations, the bank's governing council plans to adopt a more gradual policy moving forward, with expectations for a continued cut of 25 basis points in the first half of the year, stabilizing interest rates in the second half of 2025.