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Yahoo
4 days ago
- Business
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Bank of Canada expected to hold key interest rate this morning, even as core inflation starts to heat up
The Bank of Canada is widely expected to hold its key interest rate steady at its announcement at 9:45 a.m. ET today. Twenty of 26 economists polled by Reuters said they expect Canada's central bank to hold. Many have noted April's higher-than-expected core inflation figures and gross domestic product (GDP) data published last Friday showing the economy growing faster than forecast. While the GDP release showed exports to the U.S. helped boost activity more than expected, domestic demand was weak. 'Arguments for a rate cut still remain,' RBC economists Nathan Janzen and Abbey Xu wrote on Tuesday, noting weak employment, with manufacturing jobs down 30,600 in April, a stagnant housing market and underlying signs in the GDP release that the economy has slowed. RBC nonetheless expects the Bank of Canada (BoC) to hold as it watches for further signs of economic weakness, and possible government stimulus measures. In a Monday note, BMO economist Priscilla Thiagamoorthy pointed to the BoC's stated focus on 'price stability' — a phrase used frequently in the Bank's April announcement. 'With underlying price pressures remaining uncomfortably high, we are expecting the BoC to keep policy rates unchanged in June,' she wrote. Prior to the April decision when the Bank also held its key rate, the BoC had issued seven consecutive cuts to its benchmark rate. That easing cycle started in June 2024, and has lowered the policy rate from 5 per cent to its current level of 2.75 per cent. Follow Yahoo Finance Canada's live blog for news, updates and analysis of the Bank of Canada's interest rate announcement below. The uncertainty caused by the trade war has been a central focus for the BoC, and also for people involved in any part of the real estate equation – buyers, sellers, agents, brokers, you name it. The Bank isn't expected to cut today, but even if it did, experts say the move would be unlikely to stir the market. 'I think a lot of people are just really scared to take on a lot of debt,' said Victor Tran, a Toronto-based mortgage broker and Ratesdotca mortgage and real estate expert. Interest rates, though down from their peak, remain high, especially in the context of home prices that are out of reach for many, Tran says. A wild bond market, also driven by trade volatility, has also seen fixed rates up and down, according to mortgage broker Ron Butler — meaning people with mortgages up for renewal should shop around and start early to ensure they don't miss out on a better rate. Even as trade-war concerns linger, both the European Central Bank (ECB) — which sets monetary policy for countries in the eurozone, including G7 members France, Germany and Italy — and the Bank of England (BoE) resumed interest rate cuts in the weeks following the BoC's April decision to hold. The BoE cut its interest rate to 4.25 per cent on May 8, with its governor saying the trajectory of cuts is still downward, though 'gradual and careful.' Its next announcement is on June 19. The ECB, which trimmed rates to 2.4 per cent in April, a day after the BoC held steady, is expected to cut again on June 15 on the strength of this week's below-target inflation data. Meanwhile, at the Federal Reserve, which has not cut since Dec. 18 — to the displeasure of U.S. President Donald Trump — a wait-and-see approach has so far prevailed, but Yahoo Finance's Jennifer Schonberger reported this week that the FOMC is showing signs of division. The Fed's next meeting is scheduled for June 18. April's Labour Force Survey data from Statistics Canada, which offer insights into the Canadian job market, came out a few weeks after the BoC's April decision to hold rates. Most economists saw gloom plainly visible in the figures and argued that they helped the case for another rate cut — with BMO chief economist Douglas Porter writing that "it doesn't take an archeological dig to realize this is a weak report.' Canada would have seen negative net jobs in April were it not for temporary hiring for the federal election. Unemployment jumped from 6.7 per cent to 6.9 per cent, with job losses heaviest in manufacturing and concentrated in Ontario — signs of the trade war's impact. CIBC economist Ali Jaffery called the results "another turn for the worst," saying they showed "a job market that was weak heading into the trade war, now looking like it could soon buckle." The BoC's April statement and governor Tiff Macklem's opening remarks stressed 'price stability' as a recurring theme. 'We will support economic growth while ensuring inflation remains well controlled,' Macklem said. But the path forward on those objectives was complicated by April inflation data, in which the Bank's preferred measures, CPI-median and CPI-trim — core measures that filter out indirect tax effects — jumped more than expected. Headline inflation dropped, with the removal of the carbon tax. The trade war's impact showed up in the April inflation data, with prices for groceries and vehicles climbing. The core figures, each back above three per cent, returned to a pace last seen before the BoC began cutting interest rates, noted BMO chief economist Douglas Porter. "Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other, makes for a tough decision," wrote CIBC economist Andrew Grantham. The Bank of Canada should step off the sidelines with a rate cut today, say economists pointing to factors including a deceptive inflation reading and weak jobs data in April. The BoC is widely expected to hold its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. Desjardins chief economist Jimmy Jean is the minority arguing for a cut. "Indecisiveness comes at the expense of responsiveness. A June cut, by contrast, would allow the Bank to get ahead of a downturn at a time when upside tail inflation risks have diminished," he wrote in a recent report. "In other words, if Macklem still takes the lags of monetary policy seriously, this is the moment for him to take the lead." Jean notes Macklem's "slightly hawkish" tone in interviews after the recent G7 Summit in Alberta. He says April's cooler inflation print was the catalyst that turned markets against a June cut, despite rising core measures favoured by the central bank. "The Bank of Canada should probably disregard the noise currently affecting its core CPI measures," Jean wrote. The C.D. Howe Institute's Monetary Policy Council is also calling for the BoC to lower its policy rate today. The think tank says six out of nine members at its recent meeting favoured a cut. "The general assessment was that trade uncertainty is undermining confidence everywhere, and is a material negative for Canadian consumption and investment," C.D. Howe wrote last week. "Several participants emphasized weak job numbers, particularly recent payroll employment reports and job losses in the prime age group, as decisive indicators that demand is flagging and a disinflationary output gap is opening up," the think tank added. "Others noted that looking through the impact of the elimination of the consumer carbon tax on the total CPI, various measures of underlying inflation were above two per cent and, in many cases, rising." Stephen Brown, deputy chief North America economist for Capital Economics, says shrinking domestic demand within the April GDP figures reinforces his view that the Bank will cut rates today. Extreme trade uncertainty, stronger-than-expected GDP growth, and incoming fiscal stimulus are among the reasons economists are calling for the Bank of Canada to hold its policy rate today. The BoC is widely expected to keep its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. "We're entering a fresh set of unknowns by way of how the Trump administration could handle its response to a federal court's ruling against the use of IEEPA tariffs," Scotiabank chief economist Derek Holt wrote in a recent report, referring to the ongoing legal battle over the U.S. president's authority. "The BoC's next forecasts are due on July 30, and that may be a more suitable moment for re-evaluating uncertainty," he added. "It would also take us past whatever may happen around the July 9 expiration of the delayed U.S. tariffs on the EU and closer to the expiration of the 90-day suspension of more punitive tariffs on China by mid-August." Holt also notes the BoC has never cut its benchmark policy rate before when the most recent core inflation data are as high as they are today. Turning back to the trade war, BMO chief economist Doug Porter says "the great tariff inflation scare seems to be everywhere except in the data." "All of this adds up to a less pressing need for monetary policy to support the economy," he wrote in a report. "There's little debate that the heavy trade clouds will linger, but there is a growing sense that markets and the economy can deal with that uncertainty better than initially expected." RBC economists Nathan Janzen and Abbey Xu say today's decision will be another close call for the BoC. However, they ultimately see policymakers opting to pause. "The BoC has already cut rates by 225 basis points over the past year—more than other central banks," they wrote in a report. "It still has room for further cuts if economic conditions weaken, but will need to consider any government spending support measures, which are better suited to provide targeted, timely, and temporary assistance to affected sectors than interest rate cuts." Prime Minister Mark Carney has promised his government will pass an income-tax cut by Canada Day. "Fiscal stimulus is coming, and the BoC may be leery towards combining additional monetary stimulus, given the recent history of overdoing it on both counts," Holt wrote. The uncertainty caused by the trade war has been a central focus for the BoC, and also for people involved in any part of the real estate equation – buyers, sellers, agents, brokers, you name it. The Bank isn't expected to cut today, but even if it did, experts say the move would be unlikely to stir the market. 'I think a lot of people are just really scared to take on a lot of debt,' said Victor Tran, a Toronto-based mortgage broker and Ratesdotca mortgage and real estate expert. Interest rates, though down from their peak, remain high, especially in the context of home prices that are out of reach for many, Tran says. A wild bond market, also driven by trade volatility, has also seen fixed rates up and down, according to mortgage broker Ron Butler — meaning people with mortgages up for renewal should shop around and start early to ensure they don't miss out on a better rate. Even as trade-war concerns linger, both the European Central Bank (ECB) — which sets monetary policy for countries in the eurozone, including G7 members France, Germany and Italy — and the Bank of England (BoE) resumed interest rate cuts in the weeks following the BoC's April decision to hold. The BoE cut its interest rate to 4.25 per cent on May 8, with its governor saying the trajectory of cuts is still downward, though 'gradual and careful.' Its next announcement is on June 19. The ECB, which trimmed rates to 2.4 per cent in April, a day after the BoC held steady, is expected to cut again on June 15 on the strength of this week's below-target inflation data. Meanwhile, at the Federal Reserve, which has not cut since Dec. 18 — to the displeasure of U.S. President Donald Trump — a wait-and-see approach has so far prevailed, but Yahoo Finance's Jennifer Schonberger reported this week that the FOMC is showing signs of division. The Fed's next meeting is scheduled for June 18. April's Labour Force Survey data from Statistics Canada, which offer insights into the Canadian job market, came out a few weeks after the BoC's April decision to hold rates. Most economists saw gloom plainly visible in the figures and argued that they helped the case for another rate cut — with BMO chief economist Douglas Porter writing that "it doesn't take an archeological dig to realize this is a weak report.' Canada would have seen negative net jobs in April were it not for temporary hiring for the federal election. Unemployment jumped from 6.7 per cent to 6.9 per cent, with job losses heaviest in manufacturing and concentrated in Ontario — signs of the trade war's impact. CIBC economist Ali Jaffery called the results "another turn for the worst," saying they showed "a job market that was weak heading into the trade war, now looking like it could soon buckle." The BoC's April statement and governor Tiff Macklem's opening remarks stressed 'price stability' as a recurring theme. 'We will support economic growth while ensuring inflation remains well controlled,' Macklem said. But the path forward on those objectives was complicated by April inflation data, in which the Bank's preferred measures, CPI-median and CPI-trim — core measures that filter out indirect tax effects — jumped more than expected. Headline inflation dropped, with the removal of the carbon tax. The trade war's impact showed up in the April inflation data, with prices for groceries and vehicles climbing. The core figures, each back above three per cent, returned to a pace last seen before the BoC began cutting interest rates, noted BMO chief economist Douglas Porter. "Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other, makes for a tough decision," wrote CIBC economist Andrew Grantham. The Bank of Canada should step off the sidelines with a rate cut today, say economists pointing to factors including a deceptive inflation reading and weak jobs data in April. The BoC is widely expected to hold its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. Desjardins chief economist Jimmy Jean is the minority arguing for a cut. "Indecisiveness comes at the expense of responsiveness. A June cut, by contrast, would allow the Bank to get ahead of a downturn at a time when upside tail inflation risks have diminished," he wrote in a recent report. "In other words, if Macklem still takes the lags of monetary policy seriously, this is the moment for him to take the lead." Jean notes Macklem's "slightly hawkish" tone in interviews after the recent G7 Summit in Alberta. He says April's cooler inflation print was the catalyst that turned markets against a June cut, despite rising core measures favoured by the central bank. "The Bank of Canada should probably disregard the noise currently affecting its core CPI measures," Jean wrote. The C.D. Howe Institute's Monetary Policy Council is also calling for the BoC to lower its policy rate today. The think tank says six out of nine members at its recent meeting favoured a cut. "The general assessment was that trade uncertainty is undermining confidence everywhere, and is a material negative for Canadian consumption and investment," C.D. Howe wrote last week. "Several participants emphasized weak job numbers, particularly recent payroll employment reports and job losses in the prime age group, as decisive indicators that demand is flagging and a disinflationary output gap is opening up," the think tank added. "Others noted that looking through the impact of the elimination of the consumer carbon tax on the total CPI, various measures of underlying inflation were above two per cent and, in many cases, rising." Stephen Brown, deputy chief North America economist for Capital Economics, says shrinking domestic demand within the April GDP figures reinforces his view that the Bank will cut rates today. Extreme trade uncertainty, stronger-than-expected GDP growth, and incoming fiscal stimulus are among the reasons economists are calling for the Bank of Canada to hold its policy rate today. The BoC is widely expected to keep its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. "We're entering a fresh set of unknowns by way of how the Trump administration could handle its response to a federal court's ruling against the use of IEEPA tariffs," Scotiabank chief economist Derek Holt wrote in a recent report, referring to the ongoing legal battle over the U.S. president's authority. "The BoC's next forecasts are due on July 30, and that may be a more suitable moment for re-evaluating uncertainty," he added. "It would also take us past whatever may happen around the July 9 expiration of the delayed U.S. tariffs on the EU and closer to the expiration of the 90-day suspension of more punitive tariffs on China by mid-August." Holt also notes the BoC has never cut its benchmark policy rate before when the most recent core inflation data are as high as they are today. Turning back to the trade war, BMO chief economist Doug Porter says "the great tariff inflation scare seems to be everywhere except in the data." "All of this adds up to a less pressing need for monetary policy to support the economy," he wrote in a report. "There's little debate that the heavy trade clouds will linger, but there is a growing sense that markets and the economy can deal with that uncertainty better than initially expected." RBC economists Nathan Janzen and Abbey Xu say today's decision will be another close call for the BoC. However, they ultimately see policymakers opting to pause. "The BoC has already cut rates by 225 basis points over the past year—more than other central banks," they wrote in a report. "It still has room for further cuts if economic conditions weaken, but will need to consider any government spending support measures, which are better suited to provide targeted, timely, and temporary assistance to affected sectors than interest rate cuts." Prime Minister Mark Carney has promised his government will pass an income-tax cut by Canada Day. "Fiscal stimulus is coming, and the BoC may be leery towards combining additional monetary stimulus, given the recent history of overdoing it on both counts," Holt wrote. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Bank of Canada expected to hold key interest rate this morning, even as the economy shows underlying signs of weakness
The Bank of Canada is widely expected to hold its key interest rate steady at its announcement at 9:45 a.m. ET today. Twenty of 26 economists polled by Reuters said they expect Canada's central bank to hold. Many have noted April's higher-than-expected core inflation figures and gross domestic product (GDP) data published last Friday showing the economy growing faster than forecast. 'Arguments for a rate cut still remain,' RBC economists Nathan Janzen and Abbey Xu wrote on Tuesday, noting weak employment, with manufacturing jobs down 30,600 in April, a stagnant housing market and underlying signs in the GDP release that the economy has slowed. RBC nonetheless expects the Bank of Canada (BoC) to hold as it watches for further signs of economic weakness, and possible government stimulus measures. In a Monday note, BMO economist Priscilla Thiagamoorthy pointed to the BoC's stated focus on 'price stability' — a phrase used frequently in the Bank's April announcement. 'With underlying price pressures remaining uncomfortably high, we are expecting the BoC to keep policy rates unchanged in June,' she wrote. Prior to the April decision, the BoC had issued seven consecutive cuts to its benchmark rate, starting in June 2024, to bring its policy rate to its current level of 2.75 per cent. Follow Yahoo Finance Canada's live blog for news, updates and analysis of the Bank of Canada's interest rate announcement below. The BoC's April statement and governor Tiff Macklem's opening remarks stressed 'price stability' as a recurring theme. 'We will support economic growth while ensuring inflation remains well controlled,' Macklem said. But the path forward on those objectives was complicated by April inflation data, in which the Bank's preferred measures, CPI-median and CPI-trim — core measures that filter out indirect tax effects — jumped more than expected. Headline inflation dropped, with the removal of the carbon tax. The trade war's impact showed up in the April inflation data, with prices for groceries and vehicles climbing. The core figures, each back above three per cent, returned to a pace last seen before the BoC began cutting interest rates, noted BMO chief economist Douglas Porter. "Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other, makes for a tough decision," wrote CIBC economist Andrew Grantham. The Bank of Canada should step off the sidelines with a rate cut today, say economists pointing to factors including a deceptive inflation reading and weak jobs data in April. The BoC is widely expected to hold its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. Desjardins chief economist Jimmy Jean is the minority arguing for a cut. "Indecisiveness comes at the expense of responsiveness. A June cut, by contrast, would allow the Bank to get ahead of a downturn at a time when upside tail inflation risks have diminished," he wrote in a recent report. "In other words, if Macklem still takes the lags of monetary policy seriously, this is the moment for him to take the lead." Jean notes Macklem's "slightly hawkish" tone in interviews after the recent G7 Summit in Alberta. He says April's cooler inflation print was the catalyst that turned markets against a June cut, despite rising core measures favoured by the central bank. "The Bank of Canada should probably disregard the noise currently affecting its core CPI measures," Jean wrote. The C.D. Howe Institute's Monetary Policy Council is also calling for the BoC to lower its policy rate today. The think tank says six out of nine members at its recent meeting favoured a cut. "The general assessment was that trade uncertainty is undermining confidence everywhere, and is a material negative for Canadian consumption and investment," C.D. Howe wrote last week. "Several participants emphasized weak job numbers, particularly recent payroll employment reports and job losses in the prime age group, as decisive indicators that demand is flagging and a disinflationary output gap is opening up," the think tank added. "Others noted that looking through the impact of the elimination of the consumer carbon tax on the total CPI, various measures of underlying inflation were above two per cent and, in many cases, rising." Stephen Brown, deputy chief North America economist for Capital Economics, says shrinking domestic demand within the April GDP figures reinforces his view that the Bank will cut rates today. Extreme trade uncertainty, stronger-than-expected GDP growth, and incoming fiscal stimulus are among the reasons economists are calling for the Bank of Canada to hold its policy rate today. The BoC is widely expected to keep its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. "We're entering a fresh set of unknowns by way of how the Trump administration could handle its response to a federal court's ruling against the use of IEEPA tariffs," Scotiabank chief economist Derek Holt wrote in a recent report, referring to the ongoing legal battle over the U.S. president's authority. "The BoC's next forecasts are due on July 30, and that may be a more suitable moment for re-evaluating uncertainty," he added. "It would also take us past whatever may happen around the July 9 expiration of the delayed U.S. tariffs on the EU and closer to the expiration of the 90-day suspension of more punitive tariffs on China by mid-August." Holt also notes the BoC has never cut its benchmark policy rate before when the most recent core inflation data are as high as they are today. Turning back to the trade war, BMO chief economist Doug Porter says "the great tariff inflation scare seems to be everywhere except in the data." "All of this adds up to a less pressing need for monetary policy to support the economy," he wrote in a report. "There's little debate that the heavy trade clouds will linger, but there is a growing sense that markets and the economy can deal with that uncertainty better than initially expected." RBC economists Nathan Janzen and Abbey Xu say today's decision will be another close call for the BoC. However, they ultimately see policymakers opting to pause. "The BoC has already cut rates by 225 basis points over the past year—more than other central banks," they wrote in a report. "It still has room for further cuts if economic conditions weaken, but will need to consider any government spending support measures, which are better suited to provide targeted, timely, and temporary assistance to affected sectors than interest rate cuts." Prime Minister Mark Carney has promised his government will pass an income-tax cut by Canada Day. "Fiscal stimulus is coming, and the BoC may be leery towards combining additional monetary stimulus, given the recent history of overdoing it on both counts," Holt wrote. The BoC's April statement and governor Tiff Macklem's opening remarks stressed 'price stability' as a recurring theme. 'We will support economic growth while ensuring inflation remains well controlled,' Macklem said. But the path forward on those objectives was complicated by April inflation data, in which the Bank's preferred measures, CPI-median and CPI-trim — core measures that filter out indirect tax effects — jumped more than expected. Headline inflation dropped, with the removal of the carbon tax. The trade war's impact showed up in the April inflation data, with prices for groceries and vehicles climbing. The core figures, each back above three per cent, returned to a pace last seen before the BoC began cutting interest rates, noted BMO chief economist Douglas Porter. "Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other, makes for a tough decision," wrote CIBC economist Andrew Grantham. The Bank of Canada should step off the sidelines with a rate cut today, say economists pointing to factors including a deceptive inflation reading and weak jobs data in April. The BoC is widely expected to hold its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. Desjardins chief economist Jimmy Jean is the minority arguing for a cut. "Indecisiveness comes at the expense of responsiveness. A June cut, by contrast, would allow the Bank to get ahead of a downturn at a time when upside tail inflation risks have diminished," he wrote in a recent report. "In other words, if Macklem still takes the lags of monetary policy seriously, this is the moment for him to take the lead." Jean notes Macklem's "slightly hawkish" tone in interviews after the recent G7 Summit in Alberta. He says April's cooler inflation print was the catalyst that turned markets against a June cut, despite rising core measures favoured by the central bank. "The Bank of Canada should probably disregard the noise currently affecting its core CPI measures," Jean wrote. The C.D. Howe Institute's Monetary Policy Council is also calling for the BoC to lower its policy rate today. The think tank says six out of nine members at its recent meeting favoured a cut. "The general assessment was that trade uncertainty is undermining confidence everywhere, and is a material negative for Canadian consumption and investment," C.D. Howe wrote last week. "Several participants emphasized weak job numbers, particularly recent payroll employment reports and job losses in the prime age group, as decisive indicators that demand is flagging and a disinflationary output gap is opening up," the think tank added. "Others noted that looking through the impact of the elimination of the consumer carbon tax on the total CPI, various measures of underlying inflation were above two per cent and, in many cases, rising." Stephen Brown, deputy chief North America economist for Capital Economics, says shrinking domestic demand within the April GDP figures reinforces his view that the Bank will cut rates today. Extreme trade uncertainty, stronger-than-expected GDP growth, and incoming fiscal stimulus are among the reasons economists are calling for the Bank of Canada to hold its policy rate today. The BoC is widely expected to keep its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. "We're entering a fresh set of unknowns by way of how the Trump administration could handle its response to a federal court's ruling against the use of IEEPA tariffs," Scotiabank chief economist Derek Holt wrote in a recent report, referring to the ongoing legal battle over the U.S. president's authority. "The BoC's next forecasts are due on July 30, and that may be a more suitable moment for re-evaluating uncertainty," he added. "It would also take us past whatever may happen around the July 9 expiration of the delayed U.S. tariffs on the EU and closer to the expiration of the 90-day suspension of more punitive tariffs on China by mid-August." Holt also notes the BoC has never cut its benchmark policy rate before when the most recent core inflation data are as high as they are today. Turning back to the trade war, BMO chief economist Doug Porter says "the great tariff inflation scare seems to be everywhere except in the data." "All of this adds up to a less pressing need for monetary policy to support the economy," he wrote in a report. "There's little debate that the heavy trade clouds will linger, but there is a growing sense that markets and the economy can deal with that uncertainty better than initially expected." RBC economists Nathan Janzen and Abbey Xu say today's decision will be another close call for the BoC. However, they ultimately see policymakers opting to pause. "The BoC has already cut rates by 225 basis points over the past year—more than other central banks," they wrote in a report. "It still has room for further cuts if economic conditions weaken, but will need to consider any government spending support measures, which are better suited to provide targeted, timely, and temporary assistance to affected sectors than interest rate cuts." Prime Minister Mark Carney has promised his government will pass an income-tax cut by Canada Day. "Fiscal stimulus is coming, and the BoC may be leery towards combining additional monetary stimulus, given the recent history of overdoing it on both counts," Holt wrote.
Yahoo
4 days ago
- Business
- Yahoo
Bank of Canada expected to hold key interest rate this morning, even as the economy shows underlying signs of weakness
The Bank of Canada is widely expected to hold its key interest rate steady at its announcement at 9:45 a.m. ET today. Twenty of 26 economists polled by Reuters said they expect Canada's central bank to hold. Many have noted April's higher-than-expected core inflation figures and gross domestic product (GDP) data published last Friday showing the economy growing faster than forecast. 'Arguments for a rate cut still remain,' RBC economists Nathan Janzen and Abbey Xu wrote on Tuesday, noting weak employment, with manufacturing jobs down 30,600 in April, a stagnant housing market and underlying signs in the GDP release that the economy has slowed. RBC nonetheless expects the Bank of Canada (BoC) to hold as it watches for further signs of economic weakness, and possible government stimulus measures. In a Monday note, BMO economist Priscilla Thiagamoorthy pointed to the BoC's stated focus on 'price stability' — a phrase used frequently in the Bank's April announcement. 'With underlying price pressures remaining uncomfortably high, we are expecting the BoC to keep policy rates unchanged in June,' she wrote. Prior to the April decision, the BoC had issued seven consecutive cuts to its benchmark rate, starting in June 2024, to bring its policy rate to its current level of 2.75 per cent. Follow Yahoo Finance Canada's live blog for news, updates and analysis of the Bank of Canada's interest rate announcement below. Extreme trade uncertainty, stronger-than-expected GDP growth, and incoming fiscal stimulus are among the reasons economists are calling for the Bank of Canada to hold its policy rate today. The BoC is widely expected to keep its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. "We're entering a fresh set of unknowns by way of how the Trump administration could handle its response to a federal court's ruling against the use of IEEPA tariffs," Scotiabank chief economist Derek Holt wrote in a recent report, referring to the ongoing legal battle over the U.S. president's authority. "The BoC's next forecasts are due on July 30, and that may be a more suitable moment for re-evaluating uncertainty," he added. "It would also take us past whatever may happen around the July 9 expiration of the delayed U.S. tariffs on the EU and closer to the expiration of the 90-day suspension of more punitive tariffs on China by mid-August." Holt also notes the BoC has never cut its benchmark policy rate before when the most recent core inflation data are as high as they are today. Turning back to the trade war, BMO chief economist Doug Porter says "the great tariff inflation scare seems to be everywhere except in the data." "All of this adds up to a less pressing need for monetary policy to support the economy," he wrote in a report. "There's little debate that the heavy trade clouds will linger, but there is a growing sense that markets and the economy can deal with that uncertainty better than initially expected." RBC economists Nathan Janzen and Abbey Xu say today's decision will be another close call for the BoC. However, they ultimately see policymakers opting to pause. "The BoC has already cut rates by 225 basis points over the past year—more than other central banks," they wrote in a report. "It still has room for further cuts if economic conditions weaken, but will need to consider any government spending support measures, which are better suited to provide targeted, timely, and temporary assistance to affected sectors than interest rate cuts." Prime Minister Mark Carney has promised his government will pass an income-tax cut by Canada Day. "Fiscal stimulus is coming, and the BoC may be leery towards combining additional monetary stimulus, given the recent history of overdoing it on both counts," Holt wrote. Extreme trade uncertainty, stronger-than-expected GDP growth, and incoming fiscal stimulus are among the reasons economists are calling for the Bank of Canada to hold its policy rate today. The BoC is widely expected to keep its rate steady at 2.75 per cent. Three-quarters of economists in a recent poll by Reuters say they expect a second straight pause. "We're entering a fresh set of unknowns by way of how the Trump administration could handle its response to a federal court's ruling against the use of IEEPA tariffs," Scotiabank chief economist Derek Holt wrote in a recent report, referring to the ongoing legal battle over the U.S. president's authority. "The BoC's next forecasts are due on July 30, and that may be a more suitable moment for re-evaluating uncertainty," he added. "It would also take us past whatever may happen around the July 9 expiration of the delayed U.S. tariffs on the EU and closer to the expiration of the 90-day suspension of more punitive tariffs on China by mid-August." Holt also notes the BoC has never cut its benchmark policy rate before when the most recent core inflation data are as high as they are today. Turning back to the trade war, BMO chief economist Doug Porter says "the great tariff inflation scare seems to be everywhere except in the data." "All of this adds up to a less pressing need for monetary policy to support the economy," he wrote in a report. "There's little debate that the heavy trade clouds will linger, but there is a growing sense that markets and the economy can deal with that uncertainty better than initially expected." RBC economists Nathan Janzen and Abbey Xu say today's decision will be another close call for the BoC. However, they ultimately see policymakers opting to pause. "The BoC has already cut rates by 225 basis points over the past year—more than other central banks," they wrote in a report. "It still has room for further cuts if economic conditions weaken, but will need to consider any government spending support measures, which are better suited to provide targeted, timely, and temporary assistance to affected sectors than interest rate cuts." Prime Minister Mark Carney has promised his government will pass an income-tax cut by Canada Day. "Fiscal stimulus is coming, and the BoC may be leery towards combining additional monetary stimulus, given the recent history of overdoing it on both counts," Holt wrote. Sign in to access your portfolio
Hamilton Spectator
20-05-2025
- Business
- Hamilton Spectator
Canadian inflation fell to 1.7% in April after removal of consumer carbon tax, Statistics Canada says
Canadian inflation fell to 1.7 per cent in April, mainly due to the removal of the consumer carbon tax , Statistics Canada said Tuesday morning. Excluding energy prices, inflation was 2.9 per cent in April versus 2.5 per cent in March, according to the report. Statistics Canada said Canadians paid more for travel tours and food purchased from stores. Prior to Tuesday's release, economists largely expected overall inflation to have fallen to 1.6 per cent from 2.3 per cent in March. 'April's inflation reading for Canada on Tuesday will be distorted again by tax changes with the removal of the consumer carbon tax on energy products at the start of the month,' forecasted RBC economists Nathan Janzen and Abbey Xu in a note to clients Friday. 'Gasoline prices plummeted by 10 per cent nationally in April from March, and we expect consumer natural gas prices plunged 27 per cent.' The Bank of Canada's next interest rate decision is scheduled for June 4. More to come.
Yahoo
18-02-2025
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Canada's annual inflation rate ticks up to 1.9 per cent in January amid temporary GST break
Canada's annual inflation rate edged back up to 1.9 per cent in January, after slowing to 1.8 per cent in December. The faster price increases came even as the temporary GST/HST tax break brought some prices down. Statistics Canada said energy prices contributed most to the acceleration, and were partially offset by the tax break. Gas prices increased 8.6 per cent year-over-year in January, compared to a 3.5 per cent annual increase in December. The price of natural gas also rose 4.8 per cent year-over-year, following a 5.5 per cent annual decline in December. The temporary tax break, which went into effect in mid-December, continued to impact certain CPI components. In January, Canadians paid less for food purchased from restaurants, alcoholic beverages, toys, games and hobby supplies. Economists had expected the Consumer Price Index (CPI) to rise to 1.9 per cent in January, according to consensus estimates published by BMO Capital Markets. BMO economists had expected inflation to remain unchanged in January, while RBC had expected it to slow to 1.7 per cent. Scotiabank had forecast a rise to 1.9 per cent. On a monthly basis, CPI increased 0.1 per cent in January. Seasonally adjusted, it also increased 0.1 per cent. 'The tax holiday will continue to muddy inflation readings until March when we can get a cleaner read of the consumer price index that are clear of distortions,' RBC economists Nathan Janzen and Claire Fan wrote in a preview note on Friday before the data came out. Canada's annual inflation rate slowed to 1.8 per cent in December from 1.9 per cent in November, as the temporary tax break brought down the price of restaurant meals, alcohol and toys. Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on X @alicjawithaj. Download the Yahoo Finance app, available for Apple and Android.
