Bank of Canada cuts interest rate to 4.75% in June 2024: Employee rights

What happened?

For the first time since March 2020, the Bank of Canada is cutting its key interest rate, by 25 basis points to 4.75%. The Bank Rate is now at 5%, and the deposit rate at 4.75%. This move is part of the Bank’s ongoing balance sheet normalization policy. In its previous announcement, the Bank kept the key interest rate steady at 5%.

According to the BoC, the global economy grew by about 3% in the first quarter of 2024, aligning with the Bank’s April Monetary Policy Report (MPR) projections.

• United States: Their economic expansion was slower than expected due to weak exports and inventories. Private domestic demand growth remained strong but showed signs of easing.
• The Euro Area: Experienced increased activity in the first quarter
• China’s Economy: Buoyed by exports and industrial production, grew despite weak domestic demand.

Inflation in most advanced economies continues to ease at varying rates. Oil prices and financial conditions have remained stable since April.

Key highlights from the announcement

• Economic Growth: In Canada, economic growth resumed in the first quarter of 2024 after a stagnant second half in 2023. The GDP growth rate was 1.7%, slower than the MPR forecast due to weak inventory investment. Consumption growth was solid at about 3%, and business investment and housing activity also saw increases. The labour market data indicates ongoing hiring by businesses, though employment growth lags behind the working-age population. Wage pressures persist but show signs of gradual moderation. Overall, recent data suggest that the economy is operating with excess supply.
• GDP Forecast: First-quarter GDP growth at 1.7% indicates a slower-than-expected economic recovery. However, solid consumption growth, increased business investment, and housing activity provide a positive outlook for the upcoming quarters. The labour market continues to expand, albeit at a slower pace.
• Inflation Trends: CPI inflation eased further to 2.7% in April. The Bank’s preferred measures of core inflation also showed a slowdown, with three-month measures indicating continued downward momentum. Indicators of price increase breadth across CPI components have moved closer to historical averages, although shelter price inflation remains high.
• Future Prospects: With continued evidence of easing underlying inflation, the Governing Council decided that monetary policy could be less restrictive, reducing the policy interest rate by 25 basis points. Recent data has bolstered confidence that inflation will continue moving towards the 2% target. Despite this, risks to the inflation outlook remain, prompting the Governing Council to closely monitor core inflation, the demand-supply balance in the economy, inflation expectations, wage growth, and corporate pricing behavior. The Bank remains committed to restoring price stability for Canadians.

When is the next announcement?

The Bank of Canada’s next announcement regarding the key interest rate is scheduled for July 24, 2024. The Bank will also release its next full economic and inflation outlook, including risk assessments, in the Monetary Policy Report (MPR) at the same time.

How does this impact employment?

The Bank’s decision to reduce interest rates can influence job stability and growth in Canada. Lower interest rates generally stimulate economic activity, potentially leading to job creation. However, maintaining higher rates might slow down hiring as businesses face increased borrowing costs.

This latest rate cut reflects the Bank’s efforts to balance economic growth and inflation control, aiming to provide a stable economic environment for Canadians amidst global economic fluctuations.

Lost your job?

If you find yourself facing job loss, it’s crucial to understand your employment rights.

In Canada, non-unionized employees can get up to 24 months of severance pay when they are fired or laid off from their job. This includes individuals working full-time, part-time, and hourly in Ontario, Alberta, or B.C.

Severance is the compensation a non-unionized worker in Canada receives from their employer when they are fired without cause.

• Fired for cause? It’s very likely that you are still entitled to full severance pay because employees often don’t meet the conditions necessary for this type of dismissal.

Regardless of a company’s grasp on employment law, they are legally required to provide proper compensation following a termination.

This concept applies during challenging economic conditions, downsizing, the closure of a business, or major public health events such as the COVID-19 pandemic.

WATCH: Employment lawyer Lior Samfiru shares five fast facts about termination without cause on an episode of the Employment Law Show.

Talk to an employment lawyer

If you have been fired or let go for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP.

Our employment lawyers have successfully represented tens of thousands of non-unionized individuals in Ontario, Alberta, and B.C., as well as clients across all Canadian provinces (except Quebec) facing insurance claim denials.

In addition to severance package negotiations, we can assist you on a broad range of employment matters, including:

If you are a non-unionized employee who needs help with a workplace issue, contact us or call 1-855-821-5900 to get the advice you need and the compensation you deserve.