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Yahoo
6 days ago
- Business
- Yahoo
Canada's economy grows by 2.2% annualized rate in first quarter
TORONTO (Reuters) -Canada's economy grew faster than expected in the first quarter, expanding by a 2.2% annualized rate, data showed on Friday. Market reaction: CAD/ LINK: COMMENTS ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS "While headline GDP growth was solid in Q1, it was flattered by a surge in exports as companies looked to front-run potential US tariffs. Domestic demand was weak during the quarter, and monthly data point towards only slight upward momentum heading into Q2." "Early tracking for Q2 - assuming flat readings for May and June - points towards modest growth of 0.5% annualized. While that would clearly be below the economy's long-run potential, suggesting that slack is building up again, it would be better than the Bank of Canada's April MPR (Monetary Policy Report) scenarios." DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS "I think the bottom line here is the economy held up better than most most had expected. We were looking for a decent first quarter but it was better than decent." "On top of that, and maybe the biggest surprise of all today, is the early reading on April is for a small gain following a similar size one-tenth (of a percentage point) increase in March. That's frankly quite impressive." "We can take out the details of the first quarter numbers - they're not nearly as strong as the headline would suggest. But still the overall number is nevertheless important here. There's no real sign of distress in the economy from the GDP figures and I think that's the most important message." "I think this heavily reduces the chances of the Bank of Canada cutting next week." ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATE STRATEGY AT TD SECURITIES "I would say the Q1 numbers being a little bit better than expected is a positive development. Some people may focus on that final domestic demand was effectively flat but a lot of that was due to softer government spending. We did see positive business investment and I think that is really important because that was a category we were looking at to suffer in particular due to uncertainty on the trade front." "We're not yet seeing the signs of a material hit to activity due to trade tensions and for that reason, I think it should be regarded as a positive surprise." "On the basis of the GDP data, it's difficult to make the case for a rate cut in June." "Looking forward, we still expect the economy to show some degree of weakness in the middle part of this year. We still look for growth to be essentially flat for Q2 and Q3, which we think will require additional policy easing from the Bank of Canada."
Yahoo
16-04-2025
- Business
- Yahoo
Bank of Canada holds benchmark rate steady at 2.75%
TORONTO (Reuters) -The Bank of Canada on Wednesday held its benchmark interest rate at 2.75%, its first pause after seven consecutive cuts. MARKET REACTION: [CAD/] LINK: 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." Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
Bank of Canada holds benchmark rate steady at 2.75%
TORONTO (Reuters) -The Bank of Canada on Wednesday held its benchmark interest rate at 2.75%, its first pause after seven consecutive cuts. MARKET REACTION: [CAD/] LINK: 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." Sign in to access your portfolio
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
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."
