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.

Bank of Canada maintains the rate. Inflation in advanced economies has continued to come down. The Canadian economy has entered a period of weaker growth. The tightness in the labour market has continued to ease gradually. However, wage growth has remained. “With recent evidence that excess demand in the economy is easing, and given the lagged effects of monetary policy, Governing Council decided to hold the policy interest rate.” Statement ends again with template sentiment: “The Bank remains resolute in its commitment to restoring price stability for Canadians.”

Next BoC meeting in Oct 25, 2023. US Fed will make their next rate announcement Sept 20, 2023.

Bank of Canada raises rate by another 0.25%. Pointing to robust demand, strong consumption growth, tight labour markets, and some pickup in the housing market. Canada’s and US economy has been stronger than expected. Bond yields are up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation.

Although inflation has eased, with a substantial and welcome drop from its peak last summer, there will be less near-term downward momentum in inflation, as last year’s data is out of the annual calculations. Underlying price pressures appear to be more persistent than anticipated. Governing Council “remains concerned that progress towards the 2% target could stall, jeopardizing the return to price stability.”

Remarks on immigration show opposing forces with strong immigration growth adding both demand and supply. Newcomers are easing workers shortages, but boosting consumer spending and adding to demand for housing.

Statement continues to end in the same way: “The Bank remains resolute in its commitment to restoring price stability for Canadians.”

Next BoC meeting in Sept 6, 2023. US Fed will make their next rate announcement July 26, 2023.

Bank of Canada raises rate by 0.25%. Unexpected to some, but note that US did recently increase while Canada did not. Underlying inflation remains stubbornly high. Major central banks are signalling that interest rates may have to rise further to restore price stability. Canada’s economy was stronger than expected, housing market activity has picked up, labour market remains tight, excess demand more persistent than anticipated. Concerns have increased that CPI inflation could get stuck materially above the 2% target. “We will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target.”

This will ripple through to variable rate mortgages – for some the payments will increase, for the ones with the static payments, the amortization will increase; lines of credit payments increase; fixed rates now have less incentive for decrease; upcoming renewals will be impacted; we will have to watch how the housing market plays out as qualifying becomes more challenging.

Next meeting in July 12, 2023.