The odds are the Bank of Canada will reduce its overnight by .25% on Wednesday, as it did in June, says a report from Canadian Mortgage Trends (CMT), released Tuesday. “Investors and analysts have grown increasingly confident that the Bank of Canada will deliver a second consecutive rate cut on Wednesday to support the economy as inflation worries ease and signs of economic weakness grow,” says the report, adding “bond markets were pricing in 90% odds of a quarter-point rate cut, which would bring the Bank’s overnight target rate to 4.5%.” A cut would be welcomed by homeowners variable rate mortgages and lines of credit, who would see their interest costs reduced. .“Inflation is much better behaved today and the progress that’s already been made should render this a relatively easy decision,” National Bank Financial economists Taylor Schleich and Warren Lovely wrote in a recent note. “Empirical analysis of past interest rate cycles also lend support to the Bank of Canada starting off with back-to-back cuts.” CMT lists some of the factors point to a Bank of Canada rate cut: Easing inflation Recent data from Statistics Canada shows inflation has moderated with the Consumer Price Index (CPI) inflation in June easing to an annualized pace of 2.5%, down from 3.4% in May, the lowest inflation rate in more than two years. Softening labour market The latest employment data shows a labour market that’s struggling. Canada’s unemployment rate trended higher in June, to 6.4%, translating to an additional 42,000 unemployed individuals. Bruno Valko, VP of national sales for RMG Mortgages said the numbers were “awful.” “We see this in our industry with clients and their battles to buy homes, renew at higher rates, and so on,” he wrote in a note to subscribers. “Hopefully, now, the economists see our true job market. It is not resilient. It is weak [and] the Bank of Canada will notice.” High interest rates Long-term high interest rates have taken a toll, of which the Bank of Canada is aware. Recent economic indicators paint a picture of growing economic pain, creating a sense of urgency for further rate relief and consumer sentiment remains subdued, with many planning to cut spending and focus on paying down debt. “Another data release, another economic indicator justifying our call for the Bank of Canada to cut the policy rate by 25 basis points,” Desjardins economist Maëlle Boulais-Préseault wrote. Moderating wage growth Though there are signs of a softening labour market, most traditional wage measures sit around the 4% annualized mark, down from a peak of around 4.5% and 6%. Elevated wage growth can contribute to inflationary pressures. “The fact wages are moderating more slowly than inflation is not surprising: wages tend to lag adjustments in employment,” Bank of Canada Governor Tiff Macklem said in a speech last month. “Going forward, we will be looking for wage growth to moderate further.” Core inflation remains ‘sticky’ Despite a favourable inflation report for June, one month earlier the readings came in surprisingly high. While headline inflation did drop more than expected in June, core inflation still remained above 2% on a seasonally adjusted annual rate basis. “Nonetheless, we don’t think the Governing Council will miss the forest for the trees,” National Bank economists wrote. “Inflation is irrefutably better behaved than it was in the past.” .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 odds are the Bank of Canada will reduce its overnight by .25% on Wednesday, as it did in June, says a report from Canadian Mortgage Trends (CMT), released Tuesday. “Investors and analysts have grown increasingly confident that the Bank of Canada will deliver a second consecutive rate cut on Wednesday to support the economy as inflation worries ease and signs of economic weakness grow,” says the report, adding “bond markets were pricing in 90% odds of a quarter-point rate cut, which would bring the Bank’s overnight target rate to 4.5%.” A cut would be welcomed by homeowners variable rate mortgages and lines of credit, who would see their interest costs reduced. .“Inflation is much better behaved today and the progress that’s already been made should render this a relatively easy decision,” National Bank Financial economists Taylor Schleich and Warren Lovely wrote in a recent note. “Empirical analysis of past interest rate cycles also lend support to the Bank of Canada starting off with back-to-back cuts.” CMT lists some of the factors point to a Bank of Canada rate cut: Easing inflation Recent data from Statistics Canada shows inflation has moderated with the Consumer Price Index (CPI) inflation in June easing to an annualized pace of 2.5%, down from 3.4% in May, the lowest inflation rate in more than two years. Softening labour market The latest employment data shows a labour market that’s struggling. Canada’s unemployment rate trended higher in June, to 6.4%, translating to an additional 42,000 unemployed individuals. Bruno Valko, VP of national sales for RMG Mortgages said the numbers were “awful.” “We see this in our industry with clients and their battles to buy homes, renew at higher rates, and so on,” he wrote in a note to subscribers. “Hopefully, now, the economists see our true job market. It is not resilient. It is weak [and] the Bank of Canada will notice.” High interest rates Long-term high interest rates have taken a toll, of which the Bank of Canada is aware. Recent economic indicators paint a picture of growing economic pain, creating a sense of urgency for further rate relief and consumer sentiment remains subdued, with many planning to cut spending and focus on paying down debt. “Another data release, another economic indicator justifying our call for the Bank of Canada to cut the policy rate by 25 basis points,” Desjardins economist Maëlle Boulais-Préseault wrote. Moderating wage growth Though there are signs of a softening labour market, most traditional wage measures sit around the 4% annualized mark, down from a peak of around 4.5% and 6%. Elevated wage growth can contribute to inflationary pressures. “The fact wages are moderating more slowly than inflation is not surprising: wages tend to lag adjustments in employment,” Bank of Canada Governor Tiff Macklem said in a speech last month. “Going forward, we will be looking for wage growth to moderate further.” Core inflation remains ‘sticky’ Despite a favourable inflation report for June, one month earlier the readings came in surprisingly high. While headline inflation did drop more than expected in June, core inflation still remained above 2% on a seasonally adjusted annual rate basis. “Nonetheless, we don’t think the Governing Council will miss the forest for the trees,” National Bank economists wrote. “Inflation is irrefutably better behaved than it was in the past.” .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.
