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The Bank of Canada has reduced its key overnight rate by 50 basis points to 3.25 per cent, marking its fifth consecutive rate cut and the second substantial cut in a row. This move aims to lower borrowing costs and boost demand in a challenging economic environment marked by slowing GDP growth and global uncertainties.

Governor Tiff Macklem highlighted that while inflation is now stable around the central bank's 2 per cent target, economic risks remain, including rising unemployment and potential disruptions from U.S. trade policies. These challenges necessitate continued vigilance to ensure stability.

Real estate analysts predict that the rate cut will likely push fixed mortgage rates lower, benefiting borrowers. However, factors such as U.S. inflation and Federal Reserve policies may limit the extent of this decline. Analyst Penelope Graham emphasized that bond yields had already signaled this move but cautioned about the uncertain outlook for further rate adjustments.

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