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Reuters
16-04-2025
- Business
- Reuters
VIEW Bank of Canada holds benchmark rate steady at 2.75%
TORONTO, April 16 (Reuters) - The Bank of Canada on Wednesday held its benchmark interest rate at 2.75%, its first pause after seven consecutive cuts. MARKET REACTION: COMMENTS DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS "Obviously it was a difficult decision. The market was much more torn - as were economists - than is normal ahead of a Bank of Canada decision, and understandably so, given the intense uncertainty. ... He's clearly laid open the possibility of getting a lot more aggressive if the economy deteriorates substantially. ... As long as Canada isn't the prime target for the trade war, I think that the Canadian dollar actually can improve here because the U.S. dollar is likely to remain under pressure over the next year in terms of yields." ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY AT TD SECURITIES "Today's decision is in line with our expectation, but the Bank of Canada did seem a bit dovish on what is coming next, and I would reference today's decision to (BoC Governor Tiff) Macklem's March speech. We thought the bank was clearly laying out what their approach was going to be for conducting policy in an environment of trade uncertainty. And given that the economic data that we have seen in Canada has not been that negative, we did not think there was tangible evidence of a slowdown or clarity on the future path of the economy for the bank to preemptively cut rates, and they are weary about stoking inflation again. Therefore, we looked for a hold and it materialized. I do expect weakness to pile up, and the Bank will be forced to cut rates again. I think if you read in between lines there is a tinge of regret around allowing policy to remain too easy for too long following the pandemic and they would very much not like to repeat that mistake again." NICK REES, SENIOR FX MARKET ANALYST AT MONEX EUROPE LTD "While consensus had been split ahead of today's rate announcement, we do not think it should come as a surprise that the Governing Council chose to pause its easing cycle in this latest decision." "Granted, headline inflation undershot expectations yesterday - this was largely the result of gasoline and travel prices, both of which should be discounted in BoC thinking. More importantly, underlying inflation metrics remain elevated, and are yet to reverse a surprise uptick seen in the February data." "We think the Governing Council would have liked to pause easing in March to assess disinflation progress but were prevented from doing so by Trump (administration) tariff risks. With these having faded somewhat for Canada post-Liberation Day, and with a stronger loonie limiting imported inflation pressures, policymakers now have an opportunity to take stock." STEPHEN BROWN, DEPUTY CHIEF NORTH AMERICA ECONOMIST AT CAPITAL ECONOMICS "The Bank of Canada's decision to keep interest rates unchanged at 2.75% today was not a huge surprise given recent above-target gains in core prices, concerns about future price increases and uncertainty about the extent to which the economy requires additional policy support in the face of ever-changing trade policy. Nonetheless, the bank's communications were mostly dovish, which lends some support to our view that it will eventually cut interest rates to 2.0% this year, rather than pause at 2.25%, as market pricing implies."
Reuters
15-04-2025
- Business
- Reuters
VIEW Canada's annual inflation eases to 2.3% in March
TORONTO, April 15 (Reuters) - Canada's annual inflation rate fell to 2.3% in March from 2.6% in February, helped by lower gasoline and travel tour prices. Analysts had expected inflation to remain at 2.6% here. Market reaction: COMMENTARY KATHERINE JUDGE, SENIOR ECONOMIST AT CIBC CAPITAL MARKETS "The easing in price pressures is consistent with the Bank of Canada cutting interest rates by 25 bps (basis points) at tomorrow's meeting, with the downside risks to growth from the trade war outweighing any upside to inflation from tariffs in our view." ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY, TD SECURITIES "Big downside surprise offsets the previous month's big upside surprise ... I don't think this changes much for the Bank of Canada for April." "I think their mind is probably more or less made up heading into this print and you are still talking about CPI inflation that is close to the bank's target, you are still talking about core inflation metrics that are well above the bank's target and that core inflation momentum - it's 2.74% on a 3-month annualized basis - it's certainly not something that's going to produce panic at the Bank of Canada given that they've signaled that they want to wait until they have a bit more information on how the trade disruptions are going to impact the Canadian economy, particularly the inflation expectations side. I do expect they will hold (rates steady) in April." DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS "Definitely on the surface, better than expected, milder than expected. ... It's a bit of a mixed message from this report. I'd say overall the Bank of Canada is probably a little bit more comfortable with this result than what we saw last month, but it's still not great. It probably doesn't give them a whole lot of comfort. ... Does (the bank) look in the rearview mirror at still relatively sticky core inflation, or does it look forward knowing that the consumer and business sentiment has crumbled and the economy is likely to weaken in this quarter? That's a tough call. ... I don't think anyone's going to question their wisdom if they decide to trim tomorrow."
Yahoo
12-03-2025
- Business
- Yahoo
Instant View: Bank of Canada cuts benchmark rate by 25 basis points
TORONTO - The Bank of Canada on Wednesday lowered its benchmark interest rate by 25 basis points to 2.75%. MARKET REACTION: [CAD/] LINK: COMMENTS ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY, TD SECURITIES "My read is that they are going to remain very data dependent (and) that they will continue to ease if economic data starts to deteriorate. But they're not going to commit to a very robust easing path ahead of time, given the uncertainty about both the impacts of the trade tensions and how long the trade tensions will actually persist for." DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK "I think they may be signaling they're done. The final paragraph was quite hawkish. They're saying in so many words that 2% (inflation) is their job and they're more worried about upside than downside risks to that target coming from the trade tensions with the United States." DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS "The move itself was almost entirely expected. ... They're cutting because confidence has slipped in the face of a trade war, but they're certainly not promising a whole lot more. They have to wait to see how a trade war affects inflation. They're worried about both the downside risk to growth, but also the upside risk to inflation from higher tariffs. I think the key here is that they will proceed very cautiously from here. Our view is that if we're still in a full trade war, the bank will keep trimming." Sign in to access your portfolio
Reuters
07-03-2025
- Business
- Reuters
VIEW Canada's economy adds few jobs in February; unemployment unchanged
TORONTO, March 7 (Reuters) - Canada's unemployment in February was unchanged from the prior month and new job additions was only marginally up, data showed on Friday, showing early signs of an impact of uncertainty around U.S. tariffs on hiring decisions of companies. The unemployment rate for February was at 6.6% and the economy added a net of 1,100 jobs, Statistics Canada said. COMMENTARY ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY AT TD SECURITIES "What makes it difficult to really interpret this data is.. the weather in February was rather poor. I'm more focused on the hours worked number, which suggests a degree of disruption due to weather." "I don't think people in Canada were taking the tariff threat as seriously, really until later in January. February is the first month where we will be able to discern these impacts of uncertainty. And this is the first piece of sort of hard data we have for February, so it bears watching." "If we see this trend emerge over March and over April, I think we can start doing, maybe, a bit firmer conclusions." DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS "I think the market will largely look past this one for a couple reasons. First of all, of course, the big story now is the trade war. And as long as this report wasn't a major outlier, it wasn't going to have much effect. And I would not characterize this as a major outlier." "And the second is, the weather was pretty harsh in the middle of February, so we have to treat this one with a bit of caution in any event." "I guess a couple things that did stand out to me is there was a big drop in total hours worked in the month, especially in manufacturing construction. But that could be weather related." ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS "Hiring stalled during February, in what could be the first sign that tariff uncertainty is impacting the Canadian economy." "Given the stall in hiring during February, and ongoing uncertainty regarding tariffs that is likely to have larger negative impacts ahead, we continue to expect a 25 bp (basis point) cut from the Bank of Canada next week."
Reuters
28-02-2025
- Business
- Reuters
VIEW Canada's economy grows 2.6% in fourth quarter
TORONTO, Feb 28 (Reuters) - Canada's economy grew faster than expected in the fourth quarter, led by consumer spending, business investments and exports, data showed on Friday. Market reaction: CAD/ COMMENTS AVERY SHENFELD, CHIEF ECONOMIST AT CIBC CAPITAL MARKETS "Canada's economy showed some evident sparks of life in the final quarter of 2024 as it responded to lower interest rates and a sales tax holiday, but that flame could still be extinguished in 2025 if the country faces a tariff wall." ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY AT TD SECURITIES "What you're seeing here is... the easing cycle is really starting to feed through into economic activity. It's very difficult to find a thing to be upset with in this data." "The only question for the Bank of Canada is if trade disruptions will interrupt the strong momentum. You can really look at the probability for the March meeting as a proxy for imminent trade disruptions." "If Canada receives another extension, I think the Bank of Canada can look at the data and suggest that they can wait before providing more stimulus." ADAM BUTTON, CHIEF CURRENCY ANALYST AT FOREXLIVE "The Canadian economy has certainly faced some headwinds but it exited 2024 in a stronger position than believed. Canadian consumers continue to reach into their wallets and spend though I expect tariff threats to reverse some of that in Q1." "The Bank of Canada has some tough decisions to make this year on whether to rely on backward looking data or look forward and cushion the headwinds around trade and housing." here.
