Market Wire, North America

The Canadian economy accelerated toward the end of the second quarter, helping reduce market-implied odds on an aggressive easing cycle from the Bank of Canada. Numbers released by Statistics Canada this morning show real gross domestic product heading toward a 2.2-percent annualised gain in the three months ended June, above market forecasts and the Bank of Canada’s 1.5-percent estimate. The economy expanded 0.2 percent on a month-over-month basis in May, topping the 0.1-percent consensus as 15 of 20 economic sectors reported growth and goods-producing industries advanced. Manufacturers generated the biggest upside contribution—most likely on a rise in export demand—and retail...

The Bank of Canada delivered a second consecutive rate cut this morning, and language in the accompanying communications suggested that further easing could come in the months ahead, triggering a mild sell-off in the loonie. In the official statement setting out the decision, policymakers noted that progress in reducing inflation has continued, with the Bank’s preferred measures of core inflation holding below 3 percent for several months and diffusion measures nearing historical norms. Shelter price growth remains elevated, and services costs continue to rise in the areas most affected by rising wages. Overall, the Bank expects core inflation to slow...

Canadian headline inflation decelerated as expected last month, but the underlying price indicators followed most closely by the Bank of Canada remained surprisingly sticky, arguably making a back-to-back rate cut at the central bank’s July meeting marginally less likely. Data released by Statistics Canada this morning showed the Consumer Price Index decelerating to 2.7 percent on a year-over-year basis in June, down from the 2.9 percent increase recorded in May and matching consensus expectations. On a month-over-month basis, prices fell -0.1 percent. As has been the case since the Bank of Canada began raising interest rates, shelter costs did the...