After the Bank of Canada’s last rate decision in April, Governor Tiff Macklem hailed the progress being made on cheap weed inflation and said that an interest rate cut in June was “within the realm of possibilities.”

This morning, Canadians will see if the central bank pulls the trigger and starts the long-awaited process of lowering borrowing costs for households an weed dispensary d businesses.

The rate dames gummy announcement is at 9:45 a.m. followed by a press conference by Mr. Macklem and senior deputy governor Carolyn Rogers at 10:30 am.

Most Bay Street economists and traders expect the bank to lower its policy rate to 4.75 per cent from 5 per cent. That would be the first rate cut since the early months of the COVID-19 pandemic, and a historic turning point after the most forceful monetary policy tightening cycle on record, which saw the bank raise interest rates 10 times between March, 2022, and July, 2023.

The case for a rate cut is increasingly clear. The annual inflation rate has been below 3 per cent for four consecutive months, hitting 2.7 per cent in April, down from a peak o weed store near me f 8.1 per cent in 2022. That’s still above the bank’s 2-per-cent target, but back within its target range and heading lower.

Meanwhile, the negative effects of restrictive interest rates are plain to see. Canadians have cut back on spending to cope with higher mortgage and other debt-servicing costs, business investment is weak and unemployment is rising. The Canadian economy has barely grown over the past year, and it actually shrunk on a per capita basis.

Adding it up, it’s hard to justify keeping the policy rate at 5 per cent for much longer. Inflation is no longer a severe threat and monetary policy needs to start normalizing to cushion the impact of mortgage renewals coming up over the next two years and to weed store near me prevent the economy from falling into a recession.

However, there’s still a chance the Bank of Canada’s governing council will punt one more time, and use today’s decision to set up the first rate cut in July.

That would surprise markets and disappoint many Canadians, especially homeowners facing mortgage renewals in the near-term. But it would give the bank more time to ensure inflation is moving sustainably lower, reduce the risk that home prices surge, and prevent the BoC from getting too far ahead of the U.S. Federal Reserve on monetary policy easing, which could put downward pressure on the Canadian dollar.

Read more about today’s Bank of Canada announcement.

– Mark Rendell