Bank of Canada (BoC) drops their rate by another 0.5%. Canadian dollar has depreciated in the face of broad-based strength in the US dollar. The recent unemployment rate rose, as employment continued to grow more slowly than the labour force. Wage growth showed some signs of easing, but remains elevated relative to productivity. The upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.

GDP growth is weaker than projected. BoC acknowledged immigration, changes to mortgage rules, and temporary policies such as the GST suspension and stated “The Bank will look through effects that are temporary and focus on underlying trends to guide its policy decisions.” BoC’s statement appears to subtly critique the government’s temporary policy measures as economic window dressing, which lacks any meaningful economic impact.

BoC also noted increased uncertainty and clouded  economic outlook with the possibility of new tariffs on Canadian exports to US. The nod to potential US tariffs reveals Canada’s increasingly passive economic role, more passenger than driver.

Closing statement signals a definitive shift from the previous “wait and watch” approach to a clear path of rate reduction. “Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time.”

Next BoC meetings Jan 29 followed by March 12. US Fed will make their next rate announcement Dec 18, 2024.

Bank of Canada (BoC) drops their rate by 0.5%, ‘to support economic growth’.    Consumption has continued to grow but is declining on a per person basis. The labour market remains soft. Population growth has continued to expand the labour force while hiring has been modest. Wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply. Residential investment growth is also projected to rise as strong demand for housing lifts sales and spending on renovations.  Inflation in shelter costs remains elevated but has begun to ease. Business and consumer inflation expectations have largely normalized.

BoC seems to have turned the corner and now projects a gradually strengthening economy, supported by lower interest rates, with any upward and downward pressures on inflation roughly balancing out.  While their language hints at additional reductions, they’re intentionally vague about the specific timeline.   “If the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further. However, the timing and pace of further reductions in the policy rate will be guided by incoming information . We will take decisions one meeting at a time. ”

It will be interesting to see how this affects real estate, along with the recent changes in mortgage rules, particularly for first time home buyers.  BoC itself admits in today’s statement, “strong demand for housing to lift sales”. This could potentially lead to a return to a more competitive housing market, as the new mortgage affordability calculations may bring homeownership within reach for a cohort of buyers who have been waiting on the sidelines.

Next BoC meetings  Dec 11 followed by Jan 29.   US Fed will make their next rate announcement Nov 7, 2024, shortly after the US election.

As expected, Bank of Canada (BoC) drops their rate by 0.25%, for the third time this year. The labour market continues to slow. Wage growth, however, remains elevated relative to productivity. High shelter price inflation is still the biggest contributor to total inflation but is starting to slow. Inflation also remains elevated in some other services. Excess supply in the economy continues to put downward pressure on inflation. There are opposing forces on inflation which ‘Governing Council is carefully assessing’ .

Bank of Canada drops rate by 0.25%, 3rd time this year. Labour market slows, excess supply putting downward pressure. However, opposing forces elevated wage, high shelter costs, some other services. Next BoC meetings Oct 23, Dec 4. If assuming same pace, drop 0.25% x 2 by end year.

Bank of Canada (BoC) drops their rate by 0.25%, for the second time in a row. Household spending has been weak. There are signs of slack in the labour market. The unemployment rate has risen, job seekers taking longer to find work. Wage growth is showing some signs of moderating, but remains elevated.

Residential investment is expected to grow robustly. With new government limits on admissions of non-permanent residents, population growth should slow in 2025. Shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.

BoC now expects reaching their 2% target next year. They acknowledge however there are opposing forces on inflation, notably shelter and some other services, which are holding inflation up. They will continue to ‘carefully assess’ this.

Next BoC meeting is Sept 4, 2024. US Fed will make their next rate announcement July 31, 2024. The Fed has yet to initiate their first rate drop.

Bank of Canada finally drops their rate by 0.25%. Inflation in most advanced economies continues to ease. The Bank’s preferred measures of core inflation suggest continued downward momentum. However, they state recent data suggest the economy is still operating in excess supply. Shelter price inflation remains high and housing activity increased. Wage pressures remain but look to be moderating gradually.

The closing statement paints their sentiment: “With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target.”

Canada is more sensitive to interest rate than the US, so today’s move before the US is understandable. The stage is set for further rate drops, however, slow and steady pace is more reasonable to expect over fast, drastic deep cuts.

Next BoC meeting is July 24, 2024. US Fed will make their next rate announcement June 12, 2024.

Bank of Canada maintains policy rate.  Inflation in most advanced economies easing gradually. US economy stronger than anticipated. Global oil prices have moved up.  In Canada,  labour market conditions continue to ease, unemployment rate has risen gradually, wage pressures are moderating.  However, shelter price inflation is still very elevated, driven by growth in rent and mortgage interest costs.

Looks like it is much about core inflation now,  which will drive the rate drop decision.   “While inflation is still too high and risks remain, CPI and core inflation have eased further in recent months. The Council will be looking for evidence that this downward momentum is sustained. Governing Council is particularly watching the evolution of core inflation”   Inflation rates are projected to reach central bank targets in 2025.  Next BoC meeting June 5, followed by July 24.    Next US Fed rate announcement is May 1, followed by June 12.

Bank of Canada maintains policy rate.  Global economic growth slowed. US GDP growth also slowed but remained surprisingly robust. Euro economic growth was flat. Equity markets have risen sharply.

Canada economy pace remained weak and below potential with a large decline in business investment.  Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing. CPI inflation has eased, however shelter price inflation remains elevated and is the biggest contributor to inflation.  The Bank repeated its concern of the persistence in underlying inflation, but it has dropped the mention of raising rates.  Today’s announcement is in line with the ongoing sentiment of pause and then most likely rate decrease.

Next BoC meeting is April 10, 2024.   US Fed will make their next rate announcement March 20, 2024.

Bank of Canada maintains policy rate. Global economic growth continues to slow. US economy anticipated to slow down in 2024. Euro looks like to be a mild contraction. China low consumer confidence and policy uncertainty will likely restrain activity. Oil prices lower than assumed in October.

Canada economy stalled since mid-2023 and close to zero growth expected in first quarter 2024. Consumers have pulled back spending, business investment has contracted and labour market conditions have eased, with job vacancies returning to near pre-pandemic levels.

However, wages are still rising. Shelter costs remain the biggest contributor to above-target inflation. The Bank is concerned about the persistence in underlying inflation and wants to see further and sustained easing in core inflation. The Bank current prediction in reaching its coveted ‘2% target’ is now 2025.

So, it’s a little of a grim picture with the economy, but this paints low likelihood of rate increases. Timing of rate cut predictions is dynamic, but certainly the Bank prefers not to operate with sudden moves. We can also watch what the US Fed is doing to get better sense of rate sentiment and direction.

Next BoC meeting is March 6, 2024. US Fed will make their next rate announcement Jan 31, 2024.

No surprise today, Bank of Canada maintains the rate. Gives themselves a pat on the back ” Inflation has eased further… as past policy rate increases work their way through the economy.”
Economy is slowing down: job creation is slower, job vacancies have declined further, unemployment rate has risen modestly. However, wages are still rising and shelter price inflation has picked up. There is continued contribution from elevated mortgage interest costs.
Overall, concludes monetary policy is moderating spending and relieving price pressures, but continues to throw in the template ‘remains prepared to raise the policy rate further if needed. ‘ No mention of dates they estimate CPI inflation to meet their target, or acknowledgement of ‘readjusting’ their inflation target.

Next BoC meeting is Jan 24, 2024. US Fed will make their next rate announcement Dec 13, 2023, widely expected they will hold rate.

So now, it looks like pause mode is the foreseeable future. Rate cuts would be more likely than rate hikes, however, when those will happen is debateable. Do not plan for ’emergency low rates’.

Bank of Canada maintains the rate. Subtly acknowledging rate that their rate increases have dampened economic activity. Weaker demand and higher borrowing costs are weighing on business investment.
Inflation has been easing in most economies. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services.

However, the labour market remains tight, wage pressures persist. Inflation in rent and other housing costs remains high, in addition to elevated mortgage interest costs. Oil prices are higher than was assumed, and the war in Israel and Gaza is a new source of geopolitical uncertainty.

Overall, a range of indicators suggest that supply and demand are now approaching balance. But, the Bank’s preferred measures of core inflation show little downward momentum. The near-term path is higher because of energy prices and ongoing persistence in core inflation. Today’s estimate for reaching the desired ‘2%’ CPI inflation target is now 2025.

To tame rate cut expectations, the announcement ends with the repeated statement “The Bank is prepared to raise the policy rate further if needed”.

Next BoC meeting in December 6, 2023. US Fed will make their next rate announcement Nov 1, 2023. Both countries are expected to now be in lock step with their decision to pause rates.

So for now, it looks like interest rates will be ‘higher for longer’. Rate cuts would be a drastic move, but there is much global uncertainty.