- The Bank of Canada has lowered its target for the overnight rate to 4¼%. The Bank is maintaining its balance sheet normalization policy, gradually reducing its holdings of Government of Canada bonds.
- The global economy grew 2.5% in Q2. Global financial conditions have eased, and the Canadian dollar has strengthened. Canada’s Q2 growth was led by government spending and investment, but recent data suggests a slowdown. The labor market remains stable, with wage growth exceeding productivity.
- Inflation in Canada experienced a further decline in July, settling at 2.5%. While core inflation measures remain elevated, they’ve shown signs of moderation, averaging around 2.5%. Shelter costs continue to be a significant contributor to overall inflation, although their impact is gradually diminishing.
- The Bank of Canada has lowered the interest rate by 25 basis points due to moderating inflation. While overall inflation is declining, certain sectors like housing still have upward pressure. The Bank will continue to monitor the situation and adjust interest rates accordingly to ensure price stability.
- The next policy announcement and updated economic outlook are scheduled for October 23rd, 2024.
The recent interest rate cut is well-timed to revitalize the housing market, which has seen limited activity this year.
This signals a potential trend towards lower interest rates in the future.