For those renewing their mortgage in the coming months, the Bank of Canada delivered some good news.
In an announcement Wednesday morning, the Bank cut its policy rate by another 50 basis points to 3.25 per cent.
The Canadian economy grew by one per cent in the third quarter, below its October projection, and the fourth quarter looks weaker than expected. Business investment, inventories, and exports tempered Gross Domestic Product growth. However, consumer spending and housing activity picked up, suggesting lower interest rates are boosting household spending.
The unemployment rate in November was 6.8 per cent as employment grew more slowly than the labour force. Wage growth showed signs of easing but remains elevated.
Looking ahead, growth in the Gross Domestic Product next year will likely be impacted by lower immigration. The impact on inflation will be negligible because fewer immigrants will dampen demand and supply.
As for the federal government's GST holiday, the Bank anticipates an impact on demand and inflation but since the holiday is temporary, it will focus on underlying trends to guide policy decisions. Other initiatives like the one-time $250 payment to taxpayers and changes to mortgage rules will put pressure on inflation in the short term.
The possibility of new tariffs on Canadian imports to the U.S. has made projections for future economic growth in Canada uncertain.
The global economy is evolving, largely as anticipated in the October Monetary Policy Report. In the U.S., robust consumption and a solid labour market are bolstering an economy with broad-based strength.
Weaker growth is expected in the European Union, while in China, household spending is still subdued, but recent policy actions and strong exports support growth.
Wednesday's decision marks the fifth time the Bank has cut its policy rate.
The Bank's next announcement is on January 29, 2025.