Canadian dollar. Archives -

Bank of Canada Cuts Interest Rate to Support the Economy: The Bank of Canada announced a new cut in the key interest rate
to address inflation and support the Canadian economy.
This decision seeks to tackle domestic and global economic challenges affecting growth and employment rates.
Below is a detailed overview of the bank’s statement and the expected impact on the Canadian economy.

Content

Details

On Wednesday, the Bank of Canada reduced the key interest rate by 50 basis points
to 3.25% while maintaining the bank rate at 3.75% and the deposit rate at 3.25%.
The bank stated that it made this decision in response to several local and global economic factors.

The bank noted that Canada’s GDP growth in the third quarter stood at 1%,
which was below expectations, impacted by weak business investment, inventories, and exports.
Conversely, consumer spending and housing activity increased, reflecting the effects of lower interest rates.

In the labor market, the unemployment rate rose to 6.8%
in November as employment growth slowed compared to labor force growth.
Despite signs of a slowdown, wage growth remained high.
The bank pointed out that reduced immigration is expected to affect GDP growth next year negatively.

The bank stated that the Consumer Price Index (CPI)
inflation was around 2% and is expected to remain near this target over the next two years.
It also highlighted that temporarily suspending the Goods and Services Tax would reduce inflation,
but this effect would be short-lived.

Globally, the bank noted that the U.S. economy remains strong,
with robust consumer spending and a thriving labor market,
Experts expect growth in the eurozone to weaken,
while in China, policy measures and strong exports drive growth despite weak household spending.

The Bank of Canada affirmed its commitment to monitoring economic data
and inflation expectations to make future decisions on interest rates,
emphasizing its dedication to maintaining price stability and achieving its inflation target of 2%.

A Look at Economic Decisions: Bank of Canada Cuts Interest Rate to Support the Economy

Rise in Gold Price: Gold prices surged strongly during Wednesday’s trading, boosting the precious metal’s early profits.
This rise came amid weakened risk appetite and increasing fears of an economic recession.

Content

Rise in Oil Prices

Rise in Gold Price

Interest Rate Cut by the Bank of Canada

Rise in Oil Prices

Recent data on U.S. oil inventories indicate a significant drop of about 4 million barrels,
while the average expectations pointed to a decline of only about 2.6 thousand barrels.
According to U.S. Energy Information Administration data, oil inventories decreased by 3.741 million barrels,
while expectations were for a decrease of about 2.6 million barrels.
The previous reading showed a drop of 4.870 million barrels.
As a result, Brent crude prices rose by about 0.8% to reach $81.60 per barrel.
West Texas Intermediate crude prices increased by about 1% to $77.7 per barrel.

Rise in Gold Price

Gold prices surged strongly during Wednesday’s trading, boosting the precious metal’s early profits.
This rise came amid weakened risk appetite and increasing fears of an economic recession.
The upward movement of gold continued in the evening trading after releasing the U.S. Manufacturing PMI data.

Gold has enjoyed strong support as a haven during economic turmoil and volatility.
Data released this morning showed a deterioration in the manufacturing sector in the Eurozone and
a slowdown in activity during the current month,
raising investors’ concerns about the economic conditions in the world’s third-largest economic power.

Interest Rate Cut by the Bank of Canada

The Bank of Canada’s monetary policy committee decided
to cut interest rates by 25 basis points in its meeting held on Wednesday.
This is the second consecutive cut, bringing the primary interest rate down to 4.50%,
which is in line with market expectations for a rate cut by the Bank of Canada in this meeting.

It is worth noting that the Bank of Canada’s interest rate decision
pertains to the overnight lending rate among major financial institutions within the country.
Traders pay significant attention to changes in interest rates,
as short-term interest rates are the primary measure of a currency’s value.
When interest rates rise and exceed expectations, it is considered positive for the Canadian dollar,
while a larger-than-expected drop negatively impacts the Canadian dollar.

Rise in Gold Price