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Reuters
5 hours ago
- Business
- Reuters
Canadian dollar heads for fourth straight monthly gain as GDP beats estimates
TORONTO, May 30 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, and was headed for a monthly gain, as stronger-than-expected Canadian economic growth bolstered expectations the Bank of Canada would continue to leave interest rates on hold at a policy decision next week. The loonie was trading 0.4% higher at 1.3750 per U.S. dollar, or 72.73 U.S. cents, after moving in a range of 1.3740 to 1.3829. For the month, the currency was on track to gain 0.3%. That would be its fourth straight monthly advance, the longest such stretch since May 2021. Canadian gross domestic product increased at an annualized rate of 2.2% in the first quarter, eclipsing the 1.7% rise that economists had expected, as U.S. companies rushed to stockpile Canadian goods before the implementation of tariffs. A separate report showed GDP rising 0.1% in March from February, while a preliminary estimate for April also showed a gain of 0.1%. "The odds favour a hold at next week's Bank of Canada meeting," Karl Schamotta, chief market strategist at Corpay, said in a note. It's possible "that the flow of credit into Canadian households unleashed by last year's rate-cutting cycle is translating into more spending power," Schamotta added. Investors see a roughly 75% chance the BoC leaves its benchmark interest rate unchanged at 2.75% on Wednesday. The central bank moved to the sidelines in April for the first time since its easing campaign began last June. The price of oil , one of Canada's major exports, was trading 1.2% lower at $60.20 a barrel as investors weighed prospects of a potentially larger OPEC+ output hike for July. The Canadian 10-year yield was little changed at 3.205% as U.S. Treasury yields declined following data that showed American inflation was in line with expectations last month.
Globe and Mail
11 hours ago
- Business
- Globe and Mail
Quebec tables bill to begin removing interprovincial trade barriers
Quebec has introduced legislation to start taking down barriers that frustrate interprovincial trade, the latest province to take such action as Canada's political leaders hunt for ways to boost economic growth to counter U.S. tariffs. Christopher Skeete, Quebec's minister for the economy, tabled a bill Friday that facilitates the trade of goods from other provinces and the territories of Canada through a unilateral recognition of product manufacturing standards. This means goods from outside Quebec legally 'commercialized, used or consumed' inside the province without complying with any additional regulations. The bill gives the government the power to exclude some goods from the effort, however, and it has to make those exceptions public. Opinion: How to win a trade war A second piece of the proposed legislation touches on labour mobility. It aims to reduce bureaucratic requirements and make it easier for workers in other provinces who have professional certification to have those credentials recognized in Quebec. Boosting interprovincial trade is 'a priority, particularly in our current climate of uncertainty,' Mr. Skeete said in a statement. 'Our actions will allow us to build an ever more resilient and productive economy without compromising our values and what sets us apart." Premiers, federal politicians and business leaders across the country have been discussing opening up trade within Canada to shore up the country's economy, amid the loss of access to U.S. markets because of the current and potential future tariffs imposed by the White House on Canadian goods. Quebec is the fifth province to introduce or adopt bills aiming to eliminate trade barriers, following Ontario, Nova Scotia, and Prince Edward Island. Manitoba also tabled legislation but it's not as comprehensive as that of the other provinces, according to the Montreal Economic Institute (MEI), a free-market think tank. Quebec's bill is 'a major breakthrough for interprovincial trade,' said Gabriel Giguère, MEI senior policy analyst. Still, he warned that the longer its list of exceptions is, the more limited the benefits will be. Eliminating all trade barriers between Quebec and all other Canadian provinces could boost Canada's gross domestic product by $69.9-billion, the MEI estimates. The elimination of trade barriers between Quebec and Ontario alone could boost the country's GDP by $32.2-billion, it says.
Zawya
17 hours ago
- Business
- Zawya
Mideast Stocks: UAE markets fall but Dubai index ends May at multi-year high
Dubai's main share index ended May at its highest level since July 2008, even as global trade uncertainty and concern over an economic slowdown weighed on sentiment in Friday's session. Oil prices - a catalyst for Gulf markets - were flat on Friday and heading for a second consecutive weekly loss, as investors weigh a potentially larger OPEC+ output hike for July, and uncertainty spreads around U.S. tariff policy after the latest courtroom twist. United Arab Emirates' markets settled lower on Friday, with Dubai's index retreating 0.22% and Abu Dhabi's benchmark index ending 0.62% lower, although the market ended the month at its highest level since March 2024. Abu Dhabi's index also recorded a seventh consecutive weekly session of gains. Ratings agency Fitch warned on Thursday that Dubai real estate prices are likely to face a double-digit fall in the second half of the year and in 2026. The Gulf's business and tourism hub, Dubai has experienced a post-pandemic property boom, fuelled by foreign investment and government-led residency reforms, which have helped send real estate prices soaring. Real estate development company Emaar Properties fell 1.13% on Friday. Healthcare and education investment company Amanat Holding was the biggest loser on the index, down 2.78%. All other Gulf markets are closed on Friday. ABU DHABI down 0.62% to 9,685.1 DUBAI down 0.22% to 5,480.51
News24
18 hours ago
- Business
- News24
Reserve Bank trims interest rate amid global uncertainty and explores lower inflation target
The Central Bank reduced the repo rate by 25 basis points amid slowing inflation and a subdued global growth outlook. Governor Lesetja Kganyago confirmed ongoing work towards potentially lowering the inflation target. A lower inflation target could lead to lower interest rates over time, potentially benefiting borrowers and supporting economic growth and job creation. The SA Reserve Bank (SARB) has reduced its policy rate by 25 basis points, effective 30 May, in response to a complex mix of global economic uncertainty, subdued domestic growth, and well-contained inflation. The decision, announced by Governor Lesetja Kganyago following the monetary policy committee (MPC) meeting on Thursday, reflects both local and international headwinds, as well as a growing policy debate around lowering the inflation target. Five MPC members supported the 25 basis point cut, while one preferred a more aggressive 50 basis point reduction. The move brings the repo rate down in a context where global interest rates have generally softened, despite volatile financial markets and increased geopolitical risks. Kganyago noted that global economic conditions had remained volatile since the MPC's previous meeting. The US had introduced higher import tariffs only to partially reverse them, contributing to market fluctuations. US assets have sold off, while alternative safe havens, such as gold and the euro, have performed well. Lesetja Kganyago The Reserve Bank has revised its global growth forecast downwards, citing elevated uncertainty and higher trade barriers. Inflation prospects remain mixed. While tariffs and supply chain disruptions could push inflation up in some economies, other forces such as lower oil prices and subdued global demand could pull inflation down. The US Federal Reserve has left its rates unchanged, but other central banks, including the Bank of England and European Central Bank, have eased monetary policy. Domestic growth and inflation outlook At home, the SARB has lowered its GDP growth projection for this year to 1.2%, expecting a gradual rise to 1.8% by 2027. The first quarter's official growth data is still pending, but indicators from sectors such as mining and manufacturing have been weaker than expected, and unemployment has increased. Inflation, meanwhile, fell below 3% last month, driven largely by lower fuel costs. Core inflation, which excludes volatile items, was at the bottom end of the bank's target range. The central bank has also revised its inflation forecast downwards, supported by a stronger rand, lower oil prices and the cancellation of a previously expected VAT increase. Despite this benign inflation environment, the MPC assessed risks as balanced, citing possible currency volatility due to both global and local developments. The rand briefly touched multi-year lows against the US dollar last month but has since stabilised. Inflation target review underway In addition to the rate decision, Kganyago addressed ongoing work to review the country's inflation targeting framework. He said the Reserve Bank, together with the National Treasury, was considering whether SA should adopt a lower inflation target, possibly 3%, down from the current 3% to 6% band. 'Much of the heavy technical work has been done,' said Kganyago. 'We've benchmarked against both advanced and emerging economies. Many countries have revised their targets lower over time.' We are now assessing the transition, how to move from one target to another, over what period, and what support would be needed from other areas of economic policy. Lesetja Kganyago Kganyago cited international trends, noting that advanced economies typically target 2%, while the median inflation target among emerging markets is around 3%. He said that interest rates in countries with lower inflation targets are also generally lower. Responding to questions from journalists, Kganyago rejected the notion that lower inflation targets necessarily imply higher interest rates. 'That argument just baffles me,' he said. 'Countries with 2% inflation targets often have lower rates than we do.' If adopted, a lower inflation target could result in structurally lower interest rates over time, which would benefit borrowers. According to the SARB's modelling, in a 3% inflation scenario, the policy rate would fall to just under 6%, compared to remaining above 7% under the current framework. 'We would be a low inflation, low interest rate country,' Kganyago said. However, the governor acknowledged that the transition would require coordination beyond monetary policy. Administered price setters, for example, may need to adjust their pricing behaviour in line with a lower inflation environment. A move to lower inflation targeting could also support longer-term growth and job creation. 'You end up with higher growth over the forecast horizon,' said Kganyago. 'A growing economy should also create jobs.'
Reuters
a day ago
- Business
- Reuters
BoE's Taylor dismisses inflation concerns, renews call for lower rates, FT reports
May 30 (Reuters) - Bank of England policymaker Alan Taylor dismissed inflation concerns and renewed his call for lower interest rates in Britain amid risks to economic growth due to U.S. President Donald Trump's trade war. Official figures showed last week that British inflation had jumped to a higher-than-expected annual rate of 3.5% in April, from 2.6% in March. Taylor, however, said he was not concerned by the data as the higher inflation was "coming out of one-time tax and administered price changes." Taylor and another Monetary Policy Committee member, Swati Dhingra, had voted for a bigger half-point cut in the central bank's policy meeting in May, where rate-setters cut interest rates by quarter of a percentage point to 4.25%. 'I'm not going to pre-emptively announce my vote, but I think I indicated in my dissent that I thought we needed to be on a lower (monetary) policy path" Taylor told the newspaper. Taylor, the newest member of the MPC, said he was concerned by the trade situation. He made similar comments earlier in May. "I'm seeing more risk piling up on the downside scenario because of global developments,' he said, adding that the impact of Trump's tariffs on imports would 'be building up over the rest of this year in terms of trade diversion and drag on growth'. Taylor's comments were reported by the FT after the central bank's governor Andrew Bailey said in a speech on Thursday that its "gradual and careful" approach to future interest rate cuts was justified by ongoing uncertainty about the global trade picture and its impact on domestic inflation.
