Job vacancies are on a downward trend as hiring has slowed and new immigrants mitigate the labour shortages, creating a more balanced labour market.
While demand for goods has been sluggish for some time, consumer demand for services is finally easing as households feel the squeeze of high interest rates. Consumers are also holding off on major purchases like cars and appliances.
The lagged impact of prior rate hikes will continue to soften consumer demand. With consumers cutting back on spending, inflation is expected to ease, though it will take time.
One reason is that mortgage holders with expiring rates now face the prospect of renewing at much higher rates. As a result, they end up paying much more for housing and are forced to cut discretionary spending.
Even though housing costs, including rentals, far exceed headline inflation, they are evidence of a supply issue—home construction is not keeping up with population growth through immigration.
But headwinds to price stability remain. Wage growth, currently at 5.03%, is outpacing inflation. In addition, energy prices could further climb if the conflict in the Middle East spreads, putting upward pressure on overall prices.
Bank of Canada holds at 5% as growth outlook softens
The Bank of Canada held its overnight rate at 5% on Wednesday and will continue its policy of quantitative tightening, moves that were widely expected given the projected weaker growth at home and abroad this year and into next year.
Weakened growth globally dampens economic activities in Canada as demand for exports decreases.
In addition to the weaker growth, the most recent consumer price index came in lower than expected, with prices dropping by 0.1% on a month-over-month basis. Core inflation measures are also easing, though more slowly.
Job vacancies are on a downward trend as hiring has slowed and new immigrants mitigate the labour shortages, creating a more balanced labour market.
While demand for goods has been sluggish for some time, consumer demand for services is finally easing as households feel the squeeze of high interest rates. Consumers are also holding off on major purchases like cars and appliances.
The lagged impact of prior rate hikes will continue to soften consumer demand. With consumers cutting back on spending, inflation is expected to ease, though it will take time.
One reason is that mortgage holders with expiring rates now face the prospect of renewing at much higher rates. As a result, they end up paying much more for housing and are forced to cut discretionary spending.
Even though housing costs, including rentals, far exceed headline inflation, they are evidence of a supply issue—home construction is not keeping up with population growth through immigration.
But headwinds to price stability remain. Wage growth, currently at 5.03%, is outpacing inflation. In addition, energy prices could further climb if the conflict in the Middle East spreads, putting upward pressure on overall prices.
Job vacancies are on a downward trend as hiring has slowed and new immigrants mitigate the labour shortages, creating a more balanced labour market.
While demand for goods has been sluggish for some time, consumer demand for services is finally easing as households feel the squeeze of high interest rates. Consumers are also holding off on major purchases like cars and appliances.
The lagged impact of prior rate hikes will continue to soften consumer demand. With consumers cutting back on spending, inflation is expected to ease, though it will take time.
One reason is that mortgage holders with expiring rates now face the prospect of renewing at much higher rates. As a result, they end up paying much more for housing and are forced to cut discretionary spending.
Even though housing costs, including rentals, far exceed headline inflation, they are evidence of a supply issue—home construction is not keeping up with population growth through immigration.
But headwinds to price stability remain. Wage growth, currently at 5.03%, is outpacing inflation. In addition, energy prices could further climb if the conflict in the Middle East spreads, putting upward pressure on overall prices.
