Decision to cut rates by 50 bps was a close call

According to the Bank of Canada’s (BoC) minutes from the December 2024 meeting that was released Tuesday, the decision to cut rates by 50 basis points (bps) on December 11 was a close call, with some members of the governing council suggesting a smaller reduction.  

Key quotes

The Bank of Canada’s decision to cut rates by 50 bps on December 11 was a close call – minutes of the Governing Council meeting.
Members discussed arguments both for cutting by 25 bps and 50 bps.
Those in favor of a 50 bps cut acknowledged that not all data called for such a reduction on December 11.
This group said it seemed unlikely that a cut of 50 bps would take rates lower than they needed to go over the next couple of meetings.
Those in favor of a 25 bps cut suggested policy could be patient while the full effects of past cuts became clearer.
The decision to cut by 50 bps reflected a weaker-than-expected growth outlook and the fact that monetary policy no longer needed to be clearly restrictive.
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.
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.

Market reaction to the BoC Minutes 

At the time of writing, USD/CAD was up 0.02% on the day at 1.4373.