BoC cuts, as expected/Job openings shrink again

The Bank of Canada cut its main rate by 25 bps as expected to 4.25% and this now totals 75 bps of cuts off the peak of 5%. In contrast, they continue on with QT, aka, “balance sheet normalization.”

The reason given for the cut, “With continued easing in broad inflationary pressures, Governing Council decided to reduce the policy interest rate by a further 25 bps. Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up.”

As for what comes next, Governor Macklem said “If inflation continues to ease broadly in line with our July forecast, it is reasonable to expect further cuts in our policy rate.” We’ll of course see what the reduction in interest rates will mean for shelter prices as Macklem also said “shelter price inflation is still too high.” The tricky job of this central bank.