3 reasons the Bank of Canada cut by 50bp points (ditto for the RBNZ)

The Bank of Canada took an axe to its benchmark rate today with a 50bp cut:

• The full statement from the Bank of Canada interest rate decision
• Macklem statement: We anticipate cutting our policy rate further
• Bank of Canada rate decision: 50 basis point cut, as expected

Check out those posts above for the ‘as it happened’, but if you wan the TL;DR (mine anyway), the Bank of Canada cut 50 due to:

• rising unemployment (quite quickly)
• inflation well on its way to target
• very poor economic growth

The Reserve Bank of New Zealand cut its cash rate by 50bp also, earlier in October. The RBZ say tsimialr, but not the same, in the New Zealand economy:

• rising unemployment
• inflation well on its way to target
• very poor negative economic growth

So, where does this level the Reserve Bank of Australia In a very different situations, as it happens:

• rising unemployment, but not rapidly and not at levels of concern for the central bank (differeient story if you are one of the unemployed of course)
• inflation on its way to target, sort of – plenty of government ‘cost of living sup[port’ is helping ease inflation rates somewhat, but once these dissipate the CPI could very well turn back higher
• very poor economic growth

Analysts expect an RBA rate cut in Q1 / H1 of 2025. I should note that Commonwealth Bank of Australia are tipping a December cut, but that is very much out of consensus.

Bank of Canada Governor Macklem the latest with the -50

This article was written by Eamonn Sheridan at www.forexlive.com.