The Bank of Canada has reduced its target for the overnight rate to 3%, signaling its commitment to supporting economic growth. The decision also marks the end of quantitative tightening, with plans to restart asset purchases in March to stabilize and modestly grow its balance sheet in line with economic expansion.

The Bank’s January Monetary Policy Report (MPR) comes with significant uncertainty, primarily due to the unpredictable impact of potential U.S. trade tariffs under the new administration. Without new tariffs, global economic growth is expected to remain around 3% in 2024 and 2025. While the U.S. economy benefits from stronger consumption, growth in the euro area is subdued, and China faces ongoing structural challenges.

In Canada, recent interest rate cuts are stimulating consumption and housing activity, although business investment remains weak. Employment has improved, with the unemployment rate at 6.7% in December, and wage pressures have shown signs of easing. The Bank forecasts GDP growth of 1.3% in 2024, with a gradual strengthening to 1.8% in 2025 and 2026.

Inflation remains close to the 2% target, despite some volatility. The Bank expects this trend to continue, barring the impact of potential trade conflicts. With inflation under control and economic activity gradually strengthening, the Bank of Canada is focused on maintaining price stability and monitoring the risks posed by U.S. trade policies.

The Government of Ontario has announced a $20 million investment in the rehabilitation of County Road 49 in Prince Edward County, as part of the Housing-Enabling Core Servicing Fund. This funding will support the road’s much-needed repairs, which are critical for local housing development, economic growth, and community safety.

Mayor Steve Ferguson emphasized the importance of federal support, noting that this project is crucial for the future of the community. The road, which serves over 6,000 vehicles daily, is a key route for the area’s tourism, hospitality, and employment sectors. The rehabilitation will help unlock over 2,000 new housing units on the east side of Picton over the next 10 to 15 years.

The total project cost is estimated at $52.3 million, including a 25% contingency fund. While the province is contributing nearly $20 million, the municipality has already allocated $7.8 million from its 2024 budget. However, $24.5 million remains unfunded, with officials urging the federal government to step in to cover this gap.

Opened in 1966, County Road 49 has reached the end of its lifespan and is often ranked among the worst roads in Ontario. The road connects Picton with the Bay of Quinte Skyway Bridge, a major entry point to the region. Rehabilitation is seen as essential not just for infrastructure but for enabling future housing and community growth.

The Bank of Canada has reduced its overnight rate to 3.25%, down from 3.75%, continuing its balance sheet normalization policy. This move comes as global economic conditions evolve largely as expected. While the U.S. economy remains strong, Canada’s third-quarter growth fell short of projections, with weaker-than-expected performance in business investment, inventories, and exports. Consumer spending, however, has picked up, suggesting lower interest rates are starting to stimulate household demand.

Inflation in Canada has stabilized around 2%, and the Bank expects it to stay near this target over the next few years. Despite recent signs of a cooling labor market and moderate wage growth, risks remain, including potential new U.S. tariffs on Canadian exports. Domestically, policy measures like reductions in immigration and changes to GST rules may influence growth and inflation in the near term.

The housing market has also felt the effects of lower rates, with increased activity in both home purchases and housing construction, as more affordable borrowing costs support demand. However, rising home prices and higher mortgage rates could continue to pose challenges for prospective buyers.

Looking forward, the Bank is cautious but committed to maintaining price stability. While additional rate cuts are possible, each decision will depend on incoming data and the economic outlook. The next rate decision is scheduled for January 2025.