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Canada Policy Interest Rate 4.25% (consensus 4.25%) in Sep-24

• The Bank of Canada reduced the policy rate by 25 basis points to 4.25%, in line with expectations, marking the third consecutive rate cut as inflation continues to ease.
• Canada's economy grew by 2.1% in Q2 2024, but signs of weakening activity and rising unemployment highlight challenges ahead. Inflation fell to 2.5%, with shelter costs remaining a key driver.
• Further rate cuts are possible if inflation continues to decline as expected. Still, the Bank remains vigilant about potential risks, balancing the need to support growth with its commitment to price stability.

Canada Policy Interest Rate 4.5% (consensus 4.5%) in Jul-24

• The Bank of Canada reduced the policy interest rate by 25 basis points to 4.5%, consistent with the economic consensus, reflecting increased confidence in achieving the 2% inflation target.
• Canada's GDP growth increased to 1.5% in H1 2024, with CPI inflation moderating to 2.7% in June; core inflation measures indicate continued downward momentum, although shelter costs remain a significant inflationary pressure.
• The Bank remains vigilant about inflation risks, particularly from shelter and wage-driven services, and will base future interest rate decisions on incoming data and their implications for the inflation outlook, ensuring balanced economic growth and price stability.

Canada CPI Inflation 2.87% y-o-y (consensus 2.6%) in May-24

- Canada’s CPI inflation rate of 2.87% y-o-y in May 2024 exceeded expectations by 0.3pp, reversing almost all of the slowing in April 2024.
- The Core CPI of 1.8% y-o-y was further beyond expectations, although the PPI inflation register of 1.63% y-o-y points to contained cost pressures at the production stage.

Canada Unemployment Rate 6.2% (consensus 6.2%) in May-24

- Canada’s unemployment rate in May 2024 rose to 6.2%, the highest since January 2022, highlighting a weakening labour market amid modest employment gains of 26.7 thousand.
- Concomitant economic data, including declining retail sales, stagnant GDP growth, and a contracting manufacturing sector, underscore a broader economic stagnation necessitating proactive policy measures.