Canada's central bank on Wednesday lowered its key lending rate to 4.5 percent, saying the second straight cut of 25 basis points was warranted due to slowing inflation.

"With broad price pressures continuing to ease and inflation expected to move closer to 2 percent, Governing Council decided to reduce the policy interest rate by a further 25 basis points," the Bank of Canada said in a statement.

The central bank began hiking rates from a record low of 0.25 percent in March 2022 in a bid to tame soaring inflation.

It eventually held the rate for almost a year at 5.0 percent, the highest level in two decades, before initiating a cut in early June.

The reduction to 4.75 percent made it the first among the Group of Seven leading economies to ease monetary policy in the current cycle.

After an unexpected upturn in May, Canada's annual inflation rate slowed to 2.7 percent year-on-year in June, the Bank said, paving the way for a further reduction in interest rates.

Although the modest cuts will not make borrowing significantly cheaper for Canadians, the end of the monetary policy tightening cycle is expected to breath confidence in the economy.

The bank noted Wednesday that economic growth had "likely picked up to about 1.5 percent through the first half of this year," but said "household spending, including both consumer purchases and housing, has been weak."

"Ongoing excess supply is lowering inflationary pressures. At the same time, price pressures in some important parts of the economy-notably shelter and some other services-are holding inflation up," the Bank said.