BoC meeting minutes: Decision to cut rates by 50 basis points was a difficult decision

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

Key quotes

The Bank of Canada’s decision to cut rates by 50 basis points on December 11 was a tight decision – Governing Council meeting minutes.
Members discussed arguments for both cutting by 25 basis points and 50 basis points.
Those in favor of a 50 basis point cut acknowledged that not all the data justified such a reduction on December 11.
This group said it seemed unlikely that a 50 basis point cut would take rates lower than necessary in the coming meetings.
Those in favor of a 25 basis point cut suggested politics could be patient while the full effects of previous cuts became clear.
The decision to cut by 50 basis points reflected a weaker-than-expected growth outlook and the fact that monetary policy no longer needed to be clearly restrictive.
There were a variety of opinions on how much further the policy rate should be reduced and over what period this should occur.
Members agreed that they would likely be considering further reductions in the policy rate at future meetings, and would take each decision one meeting at a time.

Market reaction to BoC minutes

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