BoC cuts key rate to 4.25 per cent

As inflation falls, further reductions can be expected

- ANA PEREIRA

The Bank of Canada cut its key overnight lending rate for a third consecutive time on Wednesday.

In a news conference, governor Tiff Macklem said there was "strong consensus" among central bankers for a quarter-percentagepoint reduction this week, bringing the new key rate to 4.25 per cent.

He added that Canadians can expect further cuts if inflation continues to approach the Bank's two per cent target, while leaving the door open to a larger half-percentagepoint cut in the future.

"We are determined to get inflation down to the two per cent target, and we want it to stay there. We care as much about inflation being below the target as we do above," he said.

"We need to increasingly guard against the risk that the economy is too weak and inflation falls too much." Economists widely expected Wednesday's move, according to a Bloomberg survey, following cuts of the same size in June and July.