Bank of Canada cuts interest rate to 4.25% in September 2024: Employee rights

What happened?

The Bank of Canada announced today that it has cut its key interest rate by 25 basis points, bringing it down to 4.25%. The Bank Rate is now set at 4.5%, and the deposit rate at 4.25%. This third consecutive rate cut comes as the Bank continues its policy of balance sheet normalization, aimed at stabilizing inflation and promoting economic growth. In July, the key interest rate was lowered to 4.5% from 4.75% in June.

Key highlights from the announcement

• Global economic overview: The global economy grew by 2.5% in Q2, with strong U.S. economic performance driven by consumption. However, the U.S. labor market has weakened. Euro-area growth saw support from tourism, but manufacturing lagged. China’s economy is being slowed by weak domestic demand.
• Canadian economic growth: The Canadian economy expanded by 2.1% in Q2, surpassing July forecasts. Growth was driven by government spending and business investment. Despite this, there were signs of weaker activity in June and July. The labor market has slowed, with limited employment changes in recent months, although wage growth remains high relative to productivity.
• Inflation trends: Inflation in Canada eased to 2.5% in July, with core inflation measures averaging the same. High shelter prices remain the largest contributor to overall inflation, though pressures have started to ease. While inflation is slowing broadly, certain services continue to see elevated price increases.
• Monetary policy decision: Given the cooling inflationary pressures, the Governing Council opted for another rate cut to support economic stability. The Council remains vigilant, closely monitoring the balance between declining inflation and lingering inflationary pressures in services and housing.

When is the next announcement?

The Bank of Canada’s next announcement regarding the key interest rate is scheduled for October 23, 2024. The Bank will also publish its next full economic and inflation outlook, including risk assessments, in the Monetary Policy Report at that time.

How does this impact employment?

The Bank noted that the Canadian labor market has shown signs of slowing, with little change in employment in recent months. The rate cut is expected to help stimulate the economy, potentially creating favorable conditions for job growth by lowering borrowing costs for businesses and consumers. However, elevated wage growth relative to productivity remains a concern, and sustained wage increases without corresponding productivity gains could continue to pressure inflation.

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.