The Bank of Canada delivered its third consecutive interest rate cut on Wednesday, reducing its key lending rate to 4.25%, as the central bank shifts focus from inflation to concerns about economic growth.
The widely anticipated quarter-percentage-point cut comes amid ongoing signs of economic softness and a steady decline in inflation.
Since the start of the easing cycle in June, the central bank has lowered rates by a total of 75 basis points.
"First, headline and core inflation have continued to ease as expected," said Bank of Canada Governor Tiff Macklem in a written statement.
"Second, as inflation gets closer to target, we want to see economic growth pick up to absorb the slack in the economy so inflation returns sustainably to the two per cent target."
Canada's annual inflation rate has been below 3% for several months, reaching 2.5% in July, bringing it closer to the central bank’s 2% target. Despite stronger-than-expected growth in the second quarter, preliminary data for June and July indicate a slowdown in economic activity, adding to concerns about the strength of the economy.