Investing.com - The Bank of Canada cut its benchmark interest rate in a surprise decision in July, in a bid to stimulate growth and boost inflation, it announced on Wednesday.
The BoC said it was lowering its overnight cash rate by 25 basis points to 0.5% from 0.75% in a surprise decision.
The Bank’s estimate of growth in Canada in 2015 has been marked down considerably from its April projection. The downward revision reflects further downgrades of business investment plans in the energy sector, as well as weaker-than-expected exports of non-energy commodities and non-commodities.
Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation.
Total CPI inflation in Canada has been around 1% in recent months, reflecting year-over-year price declines for consumer energy products.
Core inflation has been close to 2%, with disinflationary pressures from economic slack being offset by transitory effects of the past depreciation of the Canadian dollar and some sector-specific factors.
"Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainably to target," the bank's statement read.
BoC Governor Stephen Poloz was to comment on the decision at a press conference later in the day.
USD/CAD was trading at 1.2910 from around 1.2795 ahead of the announcement.