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Originally Posted by opendoor
Why would shifting from restrictive rates to a neutral rate be considered a bad thing? That's what a central bank with an inflation mandate does after bring inflation into the target range.
If lowering rates is bad, does that mean raising them was a good indicator? No, it meant inflation was high. Yes, it can sometimes be a precursor to a recession, but certainly not always. Of the last 5 times the Bank of Canada reduced interest rates by 1% or more (excluding COVID, since that wasn't a financial thing), there was only one recession.
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Is the Bank of Canada cutting rates because inflation's under control or is it cutting rates because the underlying economy is more vulnerable than others? The inflation rate mandate is 2%, it's currently as of last print in June was 2.7%. FX rate is 1.38 CAD per USD and moving higher. This isn't a victory lap moment.