Bank of Canada begins cutting, first reduction since 2020
The policy rate came down to 4.75% from 5.00% in June 2024, ending a hold at the cycle peak and starting the easing that has since taken it to 2.25%.
DividendsCanada editorial · Published August 21, 2026
The Bank of Canada reduced its target for the overnight rate to 4.75% in June 2024, from 5.00%, its first cut since the emergency reductions of March 2020.
The policy rate had stood at 5.00% since July 2023, the peak of a tightening cycle that began in March 2022.
What followed
The June 2024 reduction opened a sustained easing sequence:
| Effective | Policy rate |
|---|---|
| 13 July 2023 | 5.00% |
| 6 June 2024 | 4.75% |
| 25 July 2024 | 4.50% |
| 5 September 2024 | 4.25% |
| 24 October 2024 | 3.75% |
| 12 December 2024 | 3.25% |
The rate fell further through 2025, reaching 2.25% on 30 October 2025, where it has remained.
Prime, which most Canadian variable borrowing is priced from, followed each step down — from 7.20% at the 2023 peak to 4.45% in November 2025.
Context
The tightening cycle that preceded it had been the fastest in decades, taking the policy rate from 0.25% in March 2022 to 5.00% in July 2023. The October 2024 and December 2024 reductions were each half a percentage point, larger than the quarter-point steps that are conventional.
Event dated June 6, 2024. Primary document: Bank of Canada — policy interest rate.
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