The Bank of Canada on Wednesday took a mostly optimistic stance on the country’s economy, saying the threat of the COVID-19 pandemic had largely passed while warning inflation would remain hot in the near-term.
The central bank held its key interest rate at a record low 0.25% and cut its weekly net purchases of Canadian government bonds to a target of C$2 billion, expressing confidence growth would rebound strongly and this time be more durable.
“The reopening of the economy and the strong progress on vaccinations have given us reason to be more optimistic about the direction of the economy,” Governor Tiff Macklem told reporters after the rate decision.
“But we are not there yet, and we are mindful that the process is likely to be bumpy, and some scars will remain.”
Earlier, the bank said that while the third pandemic wave had slowed Canada’s economic growth in the first half of 2021, it should pick up in the third quarter.
The central bank said Canada’s economy is now expected to grow 6.0% in 2021, down from the April forecast of 6.5%, while it revised up its 2022 growth estimate to 4.6% from 3.7%.
“The downside risks associated with the pandemic have significantly diminished,” the bank said in its summer monetary policy report.
Inflation is expected to remain at or above 3% – the top of the bank’s 1%-3% control range – through the rest of 2021, easing back to the 2% target by 2022.
Macklem made clear the pressure on inflation is seen as transitory, reiterating that economic slack would be fully absorbed in the second half of 2022.
“There’s no indication that these strong inflation readings are forcing the bank to reevaluate their monetary policy,” said Josh Nye, senior economist at Royal Bank of Canada.
The central bank is expected to further trim its bond-buying program this year, setting the stage for a rate hike as soon as late 2022. But higher rates could come sooner, said Doug Porter, chief economist at BMO Economics.
“The ‘later’ risks would be driven by the virus, while the ‘sooner’ risks could arise if inflation remains stubbornly high and/or if growth is juiced more than expected by well-supported consumers,” he said in a note.
On employment, which lags pre-pandemic levels by roughly 500,000 jobs, a strong rebound is expected over the coming months and the central bank hinted that despite high long-term unemployment, scarring may not be as bad as initially thought.
“The workers most affected by the pandemic – namely, young people and workers with fewer skills – may face less risk of skills erosion,” the bank said.
The Canadian dollar was little changed on Wednesday, trading at 1.2510 to the greenback, or 79.93 U.S. cents.
(Additional reporting by Steve Scherer in Ottawa and Nia Williams in Calgary;Editing by Paul Simao and Steve Orlofsky)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
