OTTAWA, Oct. 23 (Xinhua) -- The Bank of Canada on Wednesday reduced its policy rate by 50 basis points to 3.75 percent.
With inflation back around the 2 percent target, Governing Council decided to reduce the policy rate to support economic growth and keep inflation close to the middle of the 1 percent to 3 percent range, the Bank said in a news release.
If the economy evolves broadly in line with the latest forecast, it will reduce the policy rate further, the Bank said.
Canada's economy grew at around 2 percent in the first half of the year and the Bank expects growth of 1.75 percent in the second half, adding that GDP growth is forecast to strengthen gradually supported by lower interest rates.
According to the Bank, consumption has continued to grow but is declining on a per person basis. Exports have been boosted by the opening of the Trans Mountain Expansion pipeline. The labor market remains soft with the unemployment rate at 6.5 percent in September.
CPI inflation has declined significantly from 2.7 percent in June to 1.6 percent in September. Its preferred measures of core inflation are now below 2.5 percent, the central bank said.
With inflationary pressures no longer broad-based, business and consumer inflation expectations have largely normalized. Inflation is expected to remain close to the target of 2 percent over the projection horizon, it said.
The next scheduled date for announcing the policy rate target is Dec. 11, the Bank said. ■