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Odds of Bank of Canada rate hike just went up as economy beats expectations – Financial Post

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Markets now see 40% chance of a hike next week, 100% chance of another hike by September

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Stronger-than-expected economic growth in the first quarter could force the Bank of Canada to end its pause and hike interest rates again during one of its meetings over the summer, economists are predicting.

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Gross domestic product, the country’s main gauge on the amount of goods and services changing hands, expanded at a 3.1 per cent annualized pace over the first three months of the year. It’s a figure that blew past Bay Street’s expectations of 2.5 per cent growth and the Bank of Canada’s own 2.3 per cent projection.

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Economists have been putting more stock into the potential for a rate hike at some point over the next few months, with some predicting a bump as early as next week in its June 7 meeting.

Markets are now pricing in a 40 per cent chance of a hike next week, up from 28 per cent before the data, Reuters reports, and they now expect an increase of 25 basis points by September.

“It seems likely the Bank of Canada will be seriously considering raising rates next week,” said Royce Mendes, Desjardins head of macro strategy, in a May 31 note. “While they might pass on changing course just yet, the belief that the central bank will further tighten policy this summer is justifiably gaining traction.”

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Chart of quaterly annualized GDP

The central bank has said it would only maintain a pause on rate hikes if the economy cooled off in line with its expectations, but the latest reading points to continued strength.

The economics team at the Canadian Imperial Bank of Commerce also said the stronger GDP raises the odds of a hike, but say it’s not a done deal. CIBC senior economist Andrew Grantham said he expects policymakers will prefer to wait and see more data and revise forecasts rather than raising rates next week.

Bank of Montreal chief economist Doug Porter said that patience could be key, given the current economic outlook.

“However, given the uncertain backdrop and the possibility that inflation took a big step down in May, the (Bank of Canada) could opt to remain patient for a bit longer and signal that it’s open to hiking in July if the strength persists,” Porter said in a May 31 note.

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  1. The Bank of Canada building in Ottawa.

    Bank of Canada July rate hike would be a mistake: CIBC’s Tal

  2. Concerns about fallout from high household debt, around three-quarters of which comes from mortgages, are most pressing for those with lower incomes, CMHC said.

    Canada’s household debt is highest in the G7

  3. None

    What if interest rate hikes are doing more harm than good?

The latest data on the economy bolsters Monex Canada foreign exchange analyst Jay Zhao-Murray’s argument that the central bank would have to hike in June.

“A few days after we made that call, Governor Macklem tried to downplay the uncomfortably strong inflation data when asked by a journalist, buying himself a bit of time by suggesting that he would wait for today’s GDP report and then take all of the information together before making a decision,” Zhao-Murray wrote.

“With the final piece of the puzzle also suggesting that the economy has more excess demand than the Bank of Canada thought, the stars are aligned for a resumption in the hiking cycle.”

“We are now at a stage where, should the Bank lack the conviction to act in June, the history books likely won’t look kindly upon the decision,” he added.

• Email: shughes@postmedia.com | Twitter:

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RCMP arrest second suspect in deadly shooting east of Calgary

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EDMONTON – RCMP say a second suspect has been arrested in the killing of an Alberta county worker.

Mounties say 28-year-old Elijah Strawberry was taken into custody Friday at a house on O’Chiese First Nation.

Colin Hough, a worker with Rocky View County, was shot and killed while on the job on a rural road east of Calgary on Aug. 6.

Another man who worked for Fortis Alberta was shot and wounded, and RCMP said the suspects fled in a Rocky View County work truck.

Police later arrested Arthur Wayne Penner, 35, and charged him with first-degree murder and attempted murder, and a warrant was issued for Strawberry’s arrest.

RCMP also said there was a $10,000 reward for information leading to the arrest of Strawberry, describing him as armed and dangerous.

Chief Supt. Roberta McKale, told a news conference in Edmonton that officers had received tips and information over the last few weeks.

“I don’t know of many members that when were stopped, fuelling up our vehicles, we weren’t keeping an eye out, looking for him,” she said.

But officers had been investigating other cases when they found Strawberry.

“Our investigators were in O’Chiese First Nation at a residence on another matter and the major crimes unit was there working another file and ended up locating him hiding in the residence,” McKale said.

While an investigation is still underway, RCMP say they’re confident both suspects in the case are in police custody.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.

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26-year-old son is accused of his father’s murder on B.C.’s Sunshine Coast

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RICHMOND, B.C. – The Integrated Homicide Investigation Team says the 26-year-old son of a man found dead on British Columbia’s Sunshine Coast has been charged with his murder.

Police say 58-year-old Henry Doyle was found badly injured on a forest service road in Egmont last September and died of his injuries.

The homicide team took over when the BC Coroners Service said the man’s death was suspicious.

It says in a statement that the BC Prosecution Service has approved one count of first-degree murder against the man’s son, Jackson Doyle.

Police say the accused will remain in custody until at least his next court appearance.

The homicide team says investigators remained committed to solving the case with the help of the community of Egmont, the RCMP on the Sunshine Coast and in Richmond, and the Vancouver Police Department.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.



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Metro Vancouver’s HandyDART strike continues after talks break with no deal

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VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, have broken off without an agreement following 15 hours of talks.

Joe McCann, president of Amalgamated Transit Union Local 1724, says they stayed at the bargaining table with help from a mediator until 2 a.m. Friday and made “some progress.”

However, he says the union negotiators didn’t get an offer that they could recommend to the membership.

McCann says that in some ways they are close to an agreement, but in other areas they are “miles apart.”

About 600 employees of the door-to-door transit service for people who can’t navigate the conventional transit system have been on strike since last week, pausing service for all but essential medical trips.

McCann asks HandyDART users to be “patient,” since they are trying to get not only a fair contract for workers but also a better service for customers.

He says it’s unclear when the talks will resume, but he hopes next week at the latest.

The employer, Transdev, didn’t reply to an interview request before publication.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.

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