Royal Bank of Canada: Canada's Central Bank will cut interest rates by 50BP and reduce the Intrerest Rate to 2% by the middle of next year.

Jinshi data, October 23 news, it is expected that the Central Bank of Canada will accelerate the pace of interest rate cuts, and tonight the overnight interest rate will be lowered by 50 basis points to 3.75% from 4.25%. The poor performance of the Canadian economy has forced the Central Bank of Canada to cut interest rates earlier than most developed economies. However, the GDP growth in the third quarter of Canada is far below the Central Bank of Canada’s forecast of 2.8%, and the unemployment rate is 1% higher than the same period last year. Policymakers seem to be increasingly concerned that the current high interest rate level is causing unnecessary economic weakness. According to the estimate of the Central Bank of Canada, the impact of interest rate changes on the economy has a significant lag, which increases the urgency of quickly lowering interest rates to a more neutral level, that is, the range of 2.25% to 3.25%. It is expected that the Central Bank will eventually need to take more measures to prevent the economic weakness of Canada from continuing into the second half of 2025. Our basic assumption is to cut interest rates by 50 basis points again in December, and to lower the interest rate to 2% by the middle of next year.