Macklem: Monetary Policy Decision Press Conference Opening Statement

The Bank of Canada today reduced its target for the overnight rate to 4¼%, with the Bank Rate at 4½% and the deposit rate at 4¼%. The Bank is continuing its policy of balance sheet normalization. The global economy expanded by about 2½% in the second quarter, consistent with projections in the Bank’s July Monetary Policy Report (MPR). In the United States, economic growth was stronger than expected, led by consumption, but the labour market has slowed. Euro-area growth has been boosted by tourism and other services, while manufacturing has been soft. Inflation in both regions continues to moderate. In China, weak domestic demand weighed on economic growth. Global financial conditions have eased further since July, with declines in bond yields. The Canadian dollar has appreciated modestly, largely reflecting a lower US dollar. Oil prices are lower than assumed in the July MPR. post: MACKLEM: WE NEED TO INCREASINGLY GUARD AGAINST RISK THAT ECONOMY IS TOO WEAK AND INFLATION FALLS TOO MUCH post: BANK OF CANADA LOWERS O/N INTEREST RATE TO 4.25% **BOC CITES CONTINUED EASING IN BROAD INFLATIONARY PRESSURES **BOC: EXCESS SUPPLY IN ECONOMY CONTINUES TO PUT DOWNWARD PRESSURE ON INFLATION, WHILE PRICE INCREASES IN SHELTER AND SOME OTHER SERVICES ARE HOLDING INFLATION UP… post: BOC'S GOV. MACKLEM: IF INFLATION CONTINUES TO EASE BROADLY IN LINE WITH OUR JULY FORECAST, IT IS REASONABLE TO EXPECT FURTHER RATE CUTS.Bank of Canada cuts interest rates for 3rd-straight month The Bank of Canada has cut its key interest rate for the third straight time, bringing it to 4.25 per cent. It was widely expected that the central bank would lower its key policy rate by a quarter of a percentage point to 4.25 per cent — which would mark its third consecutive rate cut. That’s despite economic growth coming in stronger than the Bank of Canada expected in the second quarter. Statistics Canada says the economy grew at an annualized rate of 2.1 per cent for that quarter. But real gross domestic product continued to shrink on a per-person basis, marking the fifth consecutive decline. Economists typically look at GDP per capita to assess the standard of living. Overall economic growth also halted toward the end of the quarter as real gross domestic product was essentially unchanged for June. A preliminary estimate suggested the economy remained flat in July as well. “Growth in the Canadian economy was modestly better than expected in Q2, but weak momentum heading into the third quarter gives ample reason for the BoC to continue cutting interest rates,” CIBC