Chrystia Freeland Andrew Grantham Canada CIBC Bank of Canada inflation interest rate Bank of Canada interest rate Canada Interest Rate Chrystia Freeland Andrew Grantham Canada

Rate cuts could come by June 2024 — but government spending will play a role: CIBC

Reading now: 774
globalnews.ca

Reining in government spending could take some of the pressure off the Bank of Canada in tamping down inflation and help limit pain for debt-ridden Canadians, according to a new report from CIBC.

The central bank’s return to rate hikes last week with a 25-basis-point increase has economic forecasters hurriedly revising their outlooks for inflation and interest rates, with CIBC also turning its lens on the role played by fiscal policymakers.

In the report released Monday from chief economist Avery Shenfeld and senior economist Andrew Grantham, CIBC forecasts another rate hike of a quarter percentage point from the Bank of Canada in July or September, which would bring the policy rate to 5.0 per cent.

Rate cuts, meanwhile, aren’t expected to come until June 2024, according to CIBC forecasts. The central bank policy rate is projected to fall to 3.5 per cent by the end of next year, CIBC predicts.

Read more on globalnews.ca
The website covid-19.rehab is an aggregator of news from open sources. The source is indicated at the beginning and at the end of the announcement. You can send a complaint on the news if you find it unreliable.

Related News

Statistics Canada - Andrew Grantham - Unemployment rate rises for the 1st time since August amid ‘cracks’ in job market - globalnews.ca - Canada
globalnews.ca
56%
589
Unemployment rate rises for the 1st time since August amid ‘cracks’ in job market
unemployment rate rose to 5.2 per cent in May, Statistics Canada said Friday, a sign of weakening in the country’s tight labour market that will help inform the Bank of Canada’s future interest rate decisions.Employment overall was little changed in the month, the agency said, with a modest 17,000 jobs lost. Employment fell among youth aged 15-24 and rose among those aged 25-54.While part-time employment rose to the tune of 15,500 jobs in May, Canadian employers collectively cut 32,700 full-time positions, according to the report.The unemployment rate rose for the first time since August 2022, StatCan said, up from 5.0 per cent in April.The job report this morning comes after the Bank of Canada’s decision this week to raise its key interest rate target by a quarter of a percentage point to 4.75 per cent.In raising its key rate, the central bank said the labour market remains tight, reflecting continued strong demand for workers.“Some cracks appeared within the Canadian labour market in May, but these may not yet be wide enough to convince the Bank of Canada that inflation is about to meaningfully cool off,” said CIBC senior economist Andrew Grantham in a note to clients Friday morning.He suggested the weaker jobs figures might see markets scale back expectations of additional rate hikes to come, but the Bank of Canada’s policymakers may need to see “further softening” to convince them they can leave rate unchanged.Average hourly wages were up 5.1 per cent in May, continuing to outpace inflation.
Bank of Canada’s rate decision looms. Will the hot economy push it to hike? - globalnews.ca - Canada
globalnews.ca
84%
793
Bank of Canada’s rate decision looms. Will the hot economy push it to hike?
Bank of Canada’s interest rate pause is set for its toughest challenge yet on Wednesday as policymakers weigh whether another hike is needed to quell a resilient economy and push inflation down further.While money markets and some economists say that another hike is in the cards for this week’s interest rate decision, those who spoke to Global News argue the central bank is better off waiting to move off the sidelines and signalling a possible increase later this summer.The Bank of Canada’s rate hike campaign has been on a “conditional pause” since March, following eight consecutive increases that raised the central bank’s policy rate to 4.5 per cent, up from the lows of 0.25 per cent seen through much of the pandemic.The central bank said it could remain on pause as long as data continued to show the economy was cooling enough to bring inflation back down to its two per cent target, which has been forecast to reach in 2024.The rate increases to date have raised the cost of borrowing for Canadians and their banks in an effort to cool the economy and take some of the steam out of inflation, which reached 40-plus-year highs in 2022.Inflation has declined significantly, though Statistics Canada’s headline reading ticked back up slightly to 4.4 per cent in the latest consumer price index report for April from March’s 4.3 per cent.The economy, meanwhile, has proved hotter than the Bank of Canada’s estimates: gross domestic product (GDP) was higher than forecast in the first quarter of the year, and expectations of a pronounced slowdown haven’t yet materialized.Avery Shenfeld, chief economist at CIBC Capital Markets, tells Global News that the economy can only run unchecked for so long before a flurry of spending drives prices
DMCA