The Bank of Canada didn't disappoint economists who had predicted a second cut in its key lending rate.
The bank cut its overnight and deposit rate by 25 basis points to 4.5 per cent. Its bank rate is 4.75 per cent.
It cited lower inflation, slack in the labour market, expected growth in the national economy, and the global economic outlook.
Inflation fell to 2.7 per cent last month after an increase in May. The Bank of Canada said although that's still above its target, broad inflationary pressures are easing.
"The Bank's preferred measures of core inflation have been below three per cent for several months, and the breadth of price increases across components of the Consumer Price Index is now near its historical norm," said the bank. "Shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation. Inflation is also elevated in services closely affected by wages, such as restaurants and personal care."
The bank expects economic growth in Canada to pick up to about 1.5 per cent through the first half of 2024. However, household spending is weak.
An increase in the Canadian population is also tempering economic output because it's outpacing Gross Domestic Product. That should increase in the second half of 2024 and 2025.
The labour market has loosened as population growth increases faster than the labour market. Canada's unemployment rate in June was 6.4 per cent.
The global economy should continue to expand through 2026. China's economy is growing modestly, but the American economy shows signs of a slowdown. Europe is picking up after weak growth last year.
The next Bank of Canada announcement is September 4, and it'll publish its full inflationary and economic outlook on October 23.
