Yesterday, the Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.75%. The long-awaited move comes after 11 months of rate holds, and marks the first time that the key lending rate has been cut in over four years.

With continued evidence that underlying inflation is easing, the Governing Council agreed that monetary policy no longer needs to be as restrictive. Recent data has increased confidence that inflation will continue to move towards the 2% target. Nonetheless, the Bank states that risks to the inflation outlook remain. The Governing Council is also said to be closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank noted remains resolute in its commitment to restoring price stability for Canadians.

“We’ve come a long way in our fight against inflation,” said Bank of Canada Governor Tiff Macklem. “And our confidence that inflation will continue to move closer to the 2 per cent target has increased over recent months.”

The next scheduled rate announcement is set for July 24.