08:15 AM EST, 12/12/2024 (MT Newswires) -- The Bank of Canada cut its key interest rate by another 50 basis points on Wednesday, as expected, said Commerzbank.

At the same time, the BoC indicated that the pace of rate cuts could be reduced again soon, wrote the bank in a note to clients.

It amended its statement to say that "going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time."

In the meantime, the BoC has cut rates by 175 basis points, moving quite quickly towards neutral and decoupling from the United States Federal Reserve's monetary policy.

While Commerzbank certainly sees the need for further rate cuts, these are likely to come more slowly. The bank expects the BoC to return to the slower pace of 25 basis points from January and to cut rates three more times next year to 2.5%.

The Canadian dollar (CAD or loonie) should also benefit from the slower pace of rate cuts, added Commerzbank. As a consequence, the bank predicts the CAD to recover slowly from the spring onwards, as the other G10 central banks continue to cut rates, while the BoC is already nearing the end of its rate-cutting cycle.