We expect the Federal Reserve to reduce its policy rate by 25 basis points to a range between 4.25% and 4.5% at the Federal Open Market Committee’s meeting on Dec. 18. Given current growth and inflation dynamics, we expect that the Fed’s rate cuts will then be on pause until March at the ... READ MORE >
Inflation
Bank of Canada cuts interest rate to 3.25% as focus shifts to gap with U.S.
The Bank of Canada lowered its interest rate to 3.25 per cent — an overdue move out of restrictive territory given that inflation has largely been tamed. Expect more rate cuts in early 2025 to get the economy onto an expansionary trajectory. The policy rate should come down to 2.75 per cent within the ... READ MORE >
Inflation ticks up amid seasonal factors and strong growth
The disinflation trend continued to stall in November, according to the most recent consumer price index data released on Wednesday. November marked the first month since April when overall CPI inflation grew by 0.3% monthly, or 3.7% annualized, well above the Federal Reserve's 2% target and a cause ... READ MORE >
Canada’s job market cools as unemployment rises to 6.8%
Canada added 51,000 jobs in November, double the expected number, but the overall picture does not look rosy. The unemployment rate increased by 0.3 percentage points to 6.8 per cent — the highest since January 2017 — as more people looked for work. A slow job market finally hit wages, as wage growth ... READ MORE >
Morning market minute: Will wage growth moderate?
A look at U.S. wage growth ahead of the November U.S. jobs report to be released today should translate to a gain of 3.9% on a year-ago basis. We expect a net change in total employment of 220,000 positions, a 4.1% unemployment rate and a 0.3% increase in average hourly earnings. Solid job growth in ... READ MORE >
Inflation proving stubborn as major policy changes await
A robust 0.4% increase in personal spending and a 0.6% increase in personal income in October underscore just how strong the economy and households have been ahead of the critical holiday spending season. But at the same time, the strong spending and income data, released on Wednesday by the Commerce ... READ MORE >
Canada’s prices for services and shelter decelerated in October
Canada’s consumer price index accelerated in October, but that increase will not deter a rate cut by the Bank of Canada in December, though the size of the cut is up for debate. Canada’s CPI accelerated to 2.0 per cent, up from 1.6 per cent in September, because of a smaller decline in gasoline prices ... READ MORE >
The U.S. economic year ahead: Regime change, growth and rising interest rates
Since the American economy emerged from the shocks of the pandemic, we have made the case that it is undergoing a fundamental structural change. The end of historically low interest rates, the adoption of policies aimed at bolstering vital national industries and the influx of foreign capital have all ... READ MORE >
Falling jobless claims and firmer inflation point to slower rate cuts
The impact of two major hurricanes and labor strikes in the past two months on initial jobless claim data has completely faded, as the metric fell to 217,000 last week, lower than the pre-pandemic average. The continued drop in new filings for unemployment benefits, a proxy for layoffs, should suggest ... READ MORE >
Hurricanes and sticky service and housing prices propped up inflation in October
The disinflationary trend that has worked its way through the economy for much of the year modestly abated in October as the top-line consumer price index increased by 0.2% and the core rose by 0.3% on a monthly basis. On an annual basis, those figures increased by 2.6% and 3.3%, ... READ MORE >