Bank of Canada cuts key interest rate by quarter percentage point to 4.5%

The Bank of Canada delivered a widely expected interest rate cut today, marking the second consecutive time it has lowered its policy rate.

The central bank's quarter-percentage-point cut brings its policy rate down to 4.5 per cent.

The Bank of Canada says the decision was motivated by continued progress on getting inflation down as well as weakening economic conditions.

In his prepared statement, governor Tiff Macklem says as inflation edges closer to its two per cent target, the central bank is trying to avoid the risk of the economy and inflation weakening by more than expected.

At the same time, he warns the path back to two per cent inflation likely won't be a straight line and the timing of future interest rate cuts will depend on inflation's progression.

Canada's annual inflation rate fell back to 2.7 per cent in June after temporarily flaring up in May.