The latest consumer price index (CPI) report in the US, released on Thursday, showed the rate of inflation slowed to 3% in June, lower than the 3.1% called for by economists south of the border and down from 3.3% in May. The drop has at least one market watcher in Canada saying it opens the door for the US Federal Reserve (The Fed, the American counterpart to the Bank of Canada – the bank) to cut its benchmark rate as early as September. “The US CPI numbers further increase the chances of a Bank of Canada rate cut on July 24th, as it gives our own central bank further reassurance that inflation is trending in the right direction,” says Penelope Graham, director of content at ratehub.ca. “While the Bank of Canada has already made its first rate cut ahead of the US Federal Reserve, the rising likelihood the American central bank will be in the position to do so soon will support further downward movement on rates in Canada without the risk of shocking our currency.” The bank dropped its overnight rate by .25% in June, the first drop after 10 consecutive increases since March 2022. Meanwhile, the fight to control inflation from record highs in the US has led the Fed to hold its benchmark rate at a range of 5.25 - 5.5% since the start of the year, its highest level since 2001, according to Graham, who adds, similar to the bank, “the Fed implemented a historic 11-part series of rate hikes between March 2022 and July 2023 in efforts to cool inflation by slowing borrowing and consumer spending.” Prior to the US CPI report being released, the Fed’s Chair Jerome Powell told the US Congress he was pleased with progress on inflation, noting it has “eased considerably” since 2022. He added the American job market has cooled, as the unemployment rate has increased three months in a row, to 4.1%. While Powell did not say cuts were coming, financial markets took his comments to indicate lower rates are on the way, according to Graham. As a result, both US treasuries and Canadian bonds have fallen; the five-year Government of Canada bond is now in the 3.3% range, down nearly 23 basis points from five days ago. “Bond markets are reacting favourably to the news, which has put downward pressure on fixed mortgage rates. Should this persist into next week, rate shoppers can expect to see additional discounts from lenders on their fixed-rate options,” says Graham. “Canada’s own June CPI report comes out on July 16. Should this show another downward trend in inflation, it will further bolster the chance of a cut on July 24th.” It’s not a guarantee says Graham, adding markets have been largely split on whether the bank will cut again in its next rate announcement, especially as Canada’s May inflation came in higher than expected. “This improvement in the US CPI has stoked new optimism that the bank will be in a cutting mood and those hopes will only strengthen should we get good news on July 16, when Canada’s own June inflation numbers come out," says Graham. The next Bank of Canada announcement is scheduled for July 2.This is what the Western Standard is up againstThe Trudeau government is funding lies and propaganda by directly subsidizing the mainstream media. They do this to entrench the powerful Eastern, woke and corrupt interests that dominate the political, social and economic institutions in Canada. Federal authorities are constantly trying to censor us and stop us from publishing the stories that they don’t want you to read. Ottawa may weaponize our taxes and police against us, but we’ve got a powerful ally on our side.You. Free men, and free women. We need you to stand with us and become a member of the Western Standard. Here’s what you will get for your membership:Unlimited access to all articles from the Western Standard, Alberta Report, West Coast Standard, and Saskatchewan Standard, with no paywall. Our daily newsletter delivered to your inbox. .Access to exclusive Member-only WS events.Keep the West’s leading independent media voice strong and free.If you can, please support us with a monthly or annual membership. It takes just a moment to set up, and you will be making a big impact on keeping one the last independent media outlets in Canada free from Ottawa’s corrupting influence.
The latest consumer price index (CPI) report in the US, released on Thursday, showed the rate of inflation slowed to 3% in June, lower than the 3.1% called for by economists south of the border and down from 3.3% in May. The drop has at least one market watcher in Canada saying it opens the door for the US Federal Reserve (The Fed, the American counterpart to the Bank of Canada – the bank) to cut its benchmark rate as early as September. “The US CPI numbers further increase the chances of a Bank of Canada rate cut on July 24th, as it gives our own central bank further reassurance that inflation is trending in the right direction,” says Penelope Graham, director of content at ratehub.ca. “While the Bank of Canada has already made its first rate cut ahead of the US Federal Reserve, the rising likelihood the American central bank will be in the position to do so soon will support further downward movement on rates in Canada without the risk of shocking our currency.” The bank dropped its overnight rate by .25% in June, the first drop after 10 consecutive increases since March 2022. Meanwhile, the fight to control inflation from record highs in the US has led the Fed to hold its benchmark rate at a range of 5.25 - 5.5% since the start of the year, its highest level since 2001, according to Graham, who adds, similar to the bank, “the Fed implemented a historic 11-part series of rate hikes between March 2022 and July 2023 in efforts to cool inflation by slowing borrowing and consumer spending.” Prior to the US CPI report being released, the Fed’s Chair Jerome Powell told the US Congress he was pleased with progress on inflation, noting it has “eased considerably” since 2022. He added the American job market has cooled, as the unemployment rate has increased three months in a row, to 4.1%. While Powell did not say cuts were coming, financial markets took his comments to indicate lower rates are on the way, according to Graham. As a result, both US treasuries and Canadian bonds have fallen; the five-year Government of Canada bond is now in the 3.3% range, down nearly 23 basis points from five days ago. “Bond markets are reacting favourably to the news, which has put downward pressure on fixed mortgage rates. Should this persist into next week, rate shoppers can expect to see additional discounts from lenders on their fixed-rate options,” says Graham. “Canada’s own June CPI report comes out on July 16. Should this show another downward trend in inflation, it will further bolster the chance of a cut on July 24th.” It’s not a guarantee says Graham, adding markets have been largely split on whether the bank will cut again in its next rate announcement, especially as Canada’s May inflation came in higher than expected. “This improvement in the US CPI has stoked new optimism that the bank will be in a cutting mood and those hopes will only strengthen should we get good news on July 16, when Canada’s own June inflation numbers come out," says Graham. The next Bank of Canada announcement is scheduled for July 2.This is what the Western Standard is up againstThe Trudeau government is funding lies and propaganda by directly subsidizing the mainstream media. They do this to entrench the powerful Eastern, woke and corrupt interests that dominate the political, social and economic institutions in Canada. Federal authorities are constantly trying to censor us and stop us from publishing the stories that they don’t want you to read. Ottawa may weaponize our taxes and police against us, but we’ve got a powerful ally on our side.You. Free men, and free women. We need you to stand with us and become a member of the Western Standard. Here’s what you will get for your membership:Unlimited access to all articles from the Western Standard, Alberta Report, West Coast Standard, and Saskatchewan Standard, with no paywall. Our daily newsletter delivered to your inbox. .Access to exclusive Member-only WS events.Keep the West’s leading independent media voice strong and free.If you can, please support us with a monthly or annual membership. It takes just a moment to set up, and you will be making a big impact on keeping one the last independent media outlets in Canada free from Ottawa’s corrupting influence.
