(Kitco News) - The gold market saw a sharp dip in both USD and CAD before rebounding after the Bank of Canada (BoC) cut its key interest rate by 25 basis points for the third consecutive meeting.
In a much-anticipated move, the BoC lowered its target for the overnight rate to 4.25% on Wednesday, with the Bank Rate at 4.50% and the deposit rate at 4.25%.
“Our decision reflects two main considerations,” said BoC Governor Tiff Macklem in the monetary policy statement. “First, headline and core inflation have continued to ease as expected. 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 2% target.”
“If inflation continues to ease broadly in line with our July forecast, it is reasonable to expect further cuts in our policy rate,” he said. “We will continue to assess the opposing forces on inflation, and take our monetary policy decisions one at a time.”
The expected rate cut coincided with a sharp selloff in gold in the minutes following the rate announcement on Wednesday morning, though the yellow metal has since rebounded against both the Canadian dollar and the greenback. Spot gold last traded at CAD$3,372,19 an ounce, down 0.15% on the day, while it last traded at USD$2493.25 for a slight gain of 0.02% on the session.
