The latest interest-rate announcements from Canada and the United States has, as always, generated speculation about whether there will be a rate cut on the table in both countries. The consensus seems to be there will be — on Wednesday, September 17 — and in both cases the most popular figure is .25 per cent.
The current Bank of Canada policy rate is 2.75 per cent. It has not changed in the last six months, following the Bank’s last drop, on March 12.
This announcement was previewed by news that Canada’s inflation has grown by 1.9 per cent since September 2024.
CBC senior business reporter Peter Armstrong, one commentator who thinks the rate will be cut says the Bank of Canada doesn’t want “to get cutting if inflation is starting to heat up again like we’re seeing in the United States” and that when the inflation figures were released “just about everybody, from the Bank of Canada to Mom and Pop at home trying to do their grocery bill heaved a huge sigh of relief. They’re up, but not by as much as what people were expecting. The broad headline is that price increase has fallen well within, and in some cases a little below, what economists were expecting to see.”
Armstrong was told by Stephen Brown of Capital Economics that there was “nothing to stand in the way of a 25 basis points cut.”
South of the border, USA Today is reporting that the Federal Reserve is also expected to cut its prime interest rate, even though its inflation is above the two per cent threshold. One of the newspaper’s sources, CME FedWatch, says investors are 96 per cent sure the Americans’ cut will also be .25 per cent.
The U.S. interest rate has been unchanged for nine months.
For both countries, the next interest rate decisions will be announced October 29.