04:33 PM EST, 12/11/2024 (MT Newswires) -- Canada's largest stock market, the Toronto Stock Exchange closed higher on Wednesday, climbing after the Bank of Canada, as expected, cut its benchmark interest rate by 50 basis points with more cuts expected to come.

The S&P/TSX Composite Index closed up 153.37 points to 25,657.7. The Information Technology, and Energy sectors both closed up 1.4%, leading all sectors, while Health Care, down 3%, was the biggest decliner.

The Bank of Canada cut interest rates by half of a percentage point on Wednesday, meeting widespread expectations, but not every economist welcomed the move. Derek Holt, Scotiabank's Head of Capital Markets Economics, said "It almost had the feel of having an apology note attached to the decision".

Holt last week warned the central bank is misreading the job market and announcing a 50 basis cut, as it did, risks overheating conditions for the bulk of the economy.

In a summary of today's events, Holt said "waffling on the path forward" for rates from here by BoC Governor Tiff Macklem had reduced market pricing for further easing. Holt noted BoC signals that "it may be at neutral now" and added that he believes the central bank is "caught in a trap of serially underestimating fiscal stimulus."

On a related matter, Holt also addressed why Canadian "retaliation risk" to the threat of U.S. tariffs is higher than markets seem to be assuming.

Also linking the subjects of tariffs and interest rates was a Macquarie economist, who said more aggressive easing is possible from BoC in the first half of 2025 if tariff threats against Canada come to fruition.

David Doyle, head of economics at Macquarie, also linked the subjects of tariffs and interest rates, saying more aggressive easing is possible from BoC in the first half of 2025 if tariff threats against Canada are introduced. For the first half of 2025, Macquarie expects four successive cuts of 25 bps, with the overnight rate reaching 2.25% in June.

"Risks to this lie towards sharper and more aggressive easing, particularly should tariff threats against Canada come to fruition," Doyle said .

With the 50bp cut, RBC noted, the policy rate is now at the top end of the BoC's neutral range of 2.25% to 3.25%. RBC continues to have high conviction in BoC policy needing to reach a low neutral/accommodative setting to achieve their objectives of sustained above trend growth to absorb excess supply and mitigate risks of undershooting the 2% inflation target. "The market is more optimistic on the economy than we are, only pricing the terminal rate at 2.7%", RBC added.

Among stocks, Bausch + Lomb ( BLCO ) and Bausch Health ( BHC ) fell 12% and 9.1%, respectively, after the Financial Times reported that Blackstone may drop out of consortium bidding on Bausch + Lomb ( BLCO ).

Gold futures rose for a fourth-straight day late afternoon on Wednesday as a key U.S. inflation measure met expectations, increasing the likelihood the Federal Reserve will cut interest rates next week. Gold for February delivery was last seen up US$34.50 to US$2,752.90 per ounce.

West Texas Intermediate (WTI) crude oil rose on Wednesday as China's decision on Monday to loosen monetary policy continues to support the commodity, while OPEC lowered its demand forecast for this year and next and a report showed a drop in U.S. inventories. WTI crude for January delivery closed up US$1.70 to settle at US$70.29 per barrel, while February Brent crude closed up US$1.33 to US$73.52.