The Bank of Canada has just lowered its target for the overnight rate to 4.25%, continuing its efforts to normalize the balance sheet. Here's a quick breakdown of the key points:

Global Economy: The global economy expanded by about 2.5% in Q2, with stronger-than-expected growth in the U.S. and a boost from tourism in the Euro area. Inflation is moderating in both regions, while China faces challenges with weak domestic demand. Global financial conditions have eased, and the Canadian dollar has appreciated slightly.

Canadian Economy: Canada saw 2.1% growth in Q2, driven by government spending and business investment. However, preliminary indicators show that economic activity slowed through June and July. The labour market is also cooling, but wage growth remains high compared to productivity.

Inflation Trends: Inflation slowed to 2.5% in July, with core inflation measures averaging around 2.5%. High shelter price inflation is still the biggest contributor but is beginning to ease.

Policy Decision: With inflationary pressures continuing to ease, the Bank of Canada decided to reduce the policy rate by 25 basis points. They are closely monitoring the balance between excess supply and rising prices in some sectors, remaining committed to restoring price stability for Canadians.

Stay tuned for more updates as the situation evolves!