Bank of Canada cuts interest rate to 3.75% in October 2024: Employee rights

What happened?

On October 23, 2024, the Bank of Canada lowered its key interest rate by 50 basis points to 3.75%. The Bank Rate is now 4%, and the deposit rate is 3.75%. This move is part of the Bank’s plan to reduce its balance sheet and support economic growth. The rate cut comes as inflation has eased significantly, helping to keep it near the Bank’s target.

The rate was previously cut by 25 basis points to 4.25% on September 4, 2024. For a complete list of recent rate changes and detailed insights, visit our full rate change list.

Key highlights from the announcement

• Global economic overview: The global economy is projected to expand at a pace of about 3% over the next two years. Growth in the U.S. is now expected to be stronger than previously forecast, while China’s outlook remains weak. Growth in the euro area has been soft but is expected to recover moderately in 2024. Inflation in advanced economies has decreased, aligning closer to central bank targets, and global financial conditions have eased. Notably, global oil prices are about $10 lower than projected in July.
• Canadian economic growth: Canada’s economy grew by around 2% in the first half of 2024, and the Bank expects growth to moderate slightly to 1.75% in the second half of the year. Population growth continues to expand the labour force, but hiring has been modest, with unemployment at 6.5% in September. Consumer spending has grown but is declining on a per capita basis. Exports have risen, aided by the opening of the Trans Mountain Expansion pipeline. Overall, the Bank expects GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026, with economic activity projected to gradually pick up over the forecast period.
• Inflation trends: Inflation in Canada has dropped significantly, from 2.7% in June to 1.6% in September. Elevated shelter costs remain a key inflation driver but are starting to ease. Lower global oil prices have brought down gasoline prices, while excess supply in the economy has reduced inflation in many goods and services. Core inflation, the Bank’s preferred measure, is now below 2.5%. As inflationary pressures subside, inflation is expected to remain near the Bank’s 2% target over the projection horizon.
• Monetary policy decision: In light of the progress made in bringing inflation closer to its target and ongoing excess supply in the economy, the Bank’s Governing Council decided to reduce the policy rate by 50 basis points to 3.75%. The Council indicated that further rate cuts may be considered if economic conditions evolve as forecast, but future decisions will be data-dependent, taken “one meeting at a time.”

When is the next announcement?

The next interest rate announcement from the Bank of Canada is scheduled for December 4, 2024.

How does this impact employment?

Canada’s labour market remains soft, with the unemployment rate at 6.5% as of September. The influx of new workers, particularly young people and newcomers, has outpaced modest hiring. While wage growth remains high compared to productivity, the rate cut is expected to help stimulate business activity and consumer spending, which could lead to increased hiring. However, the overall employment impact will depend on how quickly the broader economy responds to the lower interest rates and whether inflation remains under control.

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.