‘Data for Business’ is an effort of the Langley Chamber, in partnership with the Canadian Chamber, to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:

Today, the Bank of Canada cut the interest rate for the second straight time, bringing it down .25% to 4.5%.  This move was expected with financial markets having priced in a rate cut in the last few weeks following recent inflation data. The next rate announcement from the Bank of Canada is due on September 4th, which is again looking to likely feature another rate cut, lowering the cost of borrowing throughout the economy. 

KEY TAKEAWAYS 

• Global growth unchanged, but U.S. weaker: The Bank’s outlook for the global economy is essentially unchanged, with roughly 3% annual growth expected over the projection. The forecast for U.S. real GDP growth in 2024 was lowered slightly (to 2.3% from 2.7%). Growth in Europe is weak but recovering (revised up to 0.7% from 0.4%). China continues to face slowing growth due to headwinds from its depressed property sector.
• Canada’s economy in excess supply: The Bank’s forecast for Canadian real GDP was revised down this year (to 1.2% from 1.5%). With weak economic growth relative to strong population growth, the Bank sees increased excess supply in Canada’s economy, which should restrain inflation pressures. Consumer spending per capita is soft, and slack in the labour market is growing, with the unemployment rate rising and people taking longer to finding jobs.
• More confidence in inflation returning to target: Given the weak economy, despite revising up its forecast for headline inflation next year (to 2.4% from 2.2%), the Bank is “increasingly confident that the ingredients to bring inflation back to target are in place”. In his press conference, the Governor added, “We need growth to hold up so inflation does not fall too much”. All told, downside risks are an increasing worry for Governing Council.