The Bank of Canada announced a reduction of a quarter of a percentage point to its key interest rate last week, bringing it down to 4.75%. This move makes Canada the first country in the G-7 to lower rates following recent global trends of increasing rates to combat inflation. Since March 2022, Canada has been raising rates to address inflation concerns.

The Bank of Canada expressed confidence that inflation is moving towards its target of 2%, prompting the decision to cut the rate. Economists predict that this could initiate a trend among G-7 economies to reduce interest rates, which would be positive news for UK businesses. Additionally, the International Monetary Fund (IMF) has recommended that UK interest rates could be reduced to 3.5% by the end of the year.

For more information, see: https://www.bbc.co.uk/news/articles/cldd6x6gglxo