Bank Of Canada's Dec 11 Jumbo Rate Cut Was a Close Call

• The Bank of Canada's decision to cut rates by 50 basis points on December 11, 2024, was a close call, with some governing council members suggesting a smaller reduction, according to minutes released on Friday, December 20, 2024.
• The central bank slashed its key policy rate to 3.25% to help address slower growth. Governor Tiff Macklem indicated further cuts would be more gradual, a shift from the previous messaging that continuous easing was needed to support growth.
• The minutes said the discussions had focused on whether a 50-basis point or a 25-basis point cut was more appropriate. "Each member of the Governing Council acknowledged that the decision was a close call based on their assessments of the data and the outlook for growth and inflation," they said.
• Those preferring a bold move were concerned about a weaker growth outlook and downside risks to the inflation forecast, even while acknowledging that not all the recent data pointed to the need for a 50-basis point cut.
• "Governing Council members also discussed the future path for interest rates. There was a range of views on how much further the policy rate would need to be reduced, and over what period that should happen," the minutes said.
• "Members agreed that they would likely be considering further reductions in the policy rate at future meetings, and they would take each decision one meeting at a time."

(Source: Reuters)