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.