Today, the Bank of Canada reduced its target for the overnight rate to 4.25%, with the Bank Rate at 4.5% and the deposit rate at 4.25%, as it continues its policy of balance sheet normalization. Here’s what’s driving the decision and what’s happening in the economy:
Global Economic Update:U.S. Growth: Stronger-than-expected growth, led by consumer spending, but the labor market is slowing.
Euro Area: Growth boosted by tourism and services, but manufacturing remains weak.
China: Economic growth is hindered by weak domestic demand.
Inflation Trends: Inflation is moderating globally, with lower bond yields and easing financial conditions.
Oil Prices: Down from earlier projections, while the Canadian dollar has appreciated modestly.
Canadian Economic Highlights:Q2 Growth: Canada’s economy grew by 2.1%, driven by government spending and business investment—slightly stronger than expected.
Labor Market: Slowing, with minimal changes in employment but continued high wage growth relative to productivity.
Inflation: Slowed to 2.5% in July, with core inflation measures around 2.5%. High shelter prices remain the largest contributor, but they are beginning to ease.
The rate cut aims to address these economic challenges and support continued moderation in inflation.For more info: www.gurmaanmortgages.com
437-484-3273