Bank of Canada Rate Cuts

OTTAWA (Reuters) – The Bank of Canada is beginning to observe the effects of its four rate cuts this year, with expectations of more evidence in the coming months, said Governor Tiff Macklem on Tuesday.

The central bank recently reduced its key benchmark rate by 50 basis points to 3.75%, marking its first significant move in over four years. The bank noted signs that Canada has returned to an era of low inflation.

After increasing rates to a 20-year high to tackle surging prices, the central bank has now implemented four consecutive cuts since June. As of September, inflation dropped to 1.6%, below the 2% target.

"You are starting to see some impact of (the cuts). Some of it is more anecdotal – I expect we will see more in the data going forward," Macklem stated.

In his remarks to the House of Commons finance committee, Macklem reiterated that the bank could consider further rate cuts if the economy aligns with forecasts. "We want to see growth strengthen. Last week's interest rate decision should contribute to a pickup in demand," he added.