It’s a hot rate cut summer

For the first time in four years, the Bank of Canada has cut its overnight rate by 25 basis points, and has signalled there’s more to come. The policy rate is still high, at 4.75%, so it won’t make a huge difference in your monthly loan, credit, and mortgage payments. In fact, Canadians will likely see monthly savings of less than $100 after this cut. You might not even notice the impact of the rate cuts for six to 18 months, said Philip Petursson, chief investment strategist at IG Wealth Management, in an emailed statement. But that doesn’t mean you should brush off this cut. The BoC is signalling that it is confident the economy is moving in the right direction. High interest rates have eased inflation levels closer to the bank’s 2% target, hitting 2.7% in April, down from 3.4% in December. If inflation moves closer to the target in the coming months, the BoC said that it’s “reasonable to expect further cuts.” Dustin Reid, chief strategist at Mackenzie Investments told Peak Money in an emailed statement that the BoC has “perhaps open[ed] the door slightly to a somewhat faster easing cycle,” and that we could see one more rate cut before the summer ends.