The Bank of Canada has delivered another rate cut.
Following a few weeks of “will-they-or-won’t-they” debates among market watchers the Bank trimmed another quarter-point off its trend-setting, overnight policy rate leaving at 4.50%.
The cut is generally seen as good news, demonstrating that the high rates put in place by the BoC have done the required job to cool inflation.
However, a couple of new reports suggest that many Canadians feel the rate relief is too little, too late.
A survey sponsored by BDO Debt Solutions and CPA Canada indicates that up to 52% of Canadians don’t expect future rate reductions will provide relief. A similar survey by credit counselling firm MNP puts the number at 56%.
“These results suggest lasting damage to consumer finances from years of inflation alongside rate hikes,” said David-Alexandre Brassard, chief economist at CPA Canada. “There will be ongoing consequences for the economy, even as the Bank of Canada lowers interest rates.”
The BoC has cautioned that, while there are good indications cuts will continue, rates will not be going back to the ultra-low levels of the last decade.
Generally, analysts expect the BoC rate will drop to 4.0% by the end of this year and settle at 2.75% by the end of 2025.