We’re just over a week away from the Bank of Canada’s final key lending rate announcement of 2024.

And after four straight rate cuts over the last few months, another cut is anticipated when the announcement comes on Dec. 11 — but pundits are divided as to whether it will be big or small.

”TD Economics predicts that the central bank will lean toward a cut of 25 basis points, bringing its lending rate down to 3.50 per cent,” TD Bank said in a Nov. 25 news release.

A year ago, the key lending rate sat at five per cent, as Bank of Canada governor Tiff Macklem was hoping to see the country’s inflation rate decrease.

Marc Ercolao, an economist with TD, said while a 25-basis point reduction is expected, “there is still the chance it could cut by 50 basis points.”

“There is still a high degree of uncertainty surrounding the next announcement.”

RBC Economics spokesperson Nathan Janzen, meanwhile, said he sees the signs pointing toward a big cut.

“The (gross domestic product) GDP numbers should help to reinforce that interest rates are higher than they need to be to maintain inflation sustainably at a two-per-cent rate,” Janzen said in a Nov. 29 news release. “The Bank of Canada will also be watching (the) labour market data closely, but our own base-case assumption is for another 50 basis point cut to the overnight rate in December.”

Back on Oct. 23, the Bank of Canada cut its key overnight lending rate to 3.75 per cent — dropping the figure by 50 basis points from the previous 4.25 per cent.

The bank’s overnight lending rate is used by mortgage and loan companies to compose fixed and variable interest rate levels.

During that announcement, Macklem said if inflation stays in line with the forecast, “we expect to reduce the policy rate further.”

The announcement is set to come out Dec. 11, with the next monetary policy report slated for Jan. 25, 2025.

Source: The Hamilton Spectator