Over the last two years, the Bank of Canada and the U.S. Federal Reserve have taken drastic steps to cool inflation. While unprecedented interest rate hikes have taken a toll on the Canadian economy, the U.S. economy is booming. We can see this playing out with the divergence between the Canadian dollar and the U.S. dollar. The Canadian economy is quickly getting to the Bank of Canada’s 2% inflation target while U.S. inflation is actually heating up, hitting 3.5% in March. That’s well above the Federal Reserve’s target of 2%. Stubbornly high U.S. inflation means the U.S. Federal Reserve may no ..read more

It looks like the Bank of Canada will get what it wanted, a soft economic landing, in which growth has slowed considerably but avoided a recession. In less than two years, the Bank of Canada raised interest rates 10 times, from near zero to 5%. In June 2022, Canadian inflation hit its highest level in 40 years at 8.1%. Since then, inflation has come down and currently sits at 2.8%. That puts it close to the Bank of Canada’s target range of 2%. Has the Canadian Economy Avoided a Recession? When the Bank of Canada began its aggressive interest rate hike policy in March 2022 to cool inflation, ma ..read more

Canada’s inflation rate continues to surprise to the downside. After unexpectedly cooling to 2.9% in January, economists expected the headline inflation rate to rise to 3.1% in February. That didn’t happen. Instead, Canada’s inflation rate cooled to 2.8%. Mortgage and rent interest costs were the biggest driver of the inflation rate. After a 4% decline in January, gas prices inched up 0.8% in February. And, for the first time in more than two years, grocery prices in Canada climbed at a slower pace than the headline inflation rate. Canada’s core inflation rate, which strips out volatile sector ..read more

Statistics Canada reported that the Canadian economy increased by 1% in the fourth quarter. This followed a decline of 0.5% in the third quarter. The fourth quarter increase in gross domestic product (GDP) means that the Canadian economy avoided a recession, which is defined as two consecutive quarters of contraction. How Is the Canadian Economy Doing? While we may have avoided a technical recession, the country has been straddling a recession for years, thanks to anemic growth. More recently, however, interest rates, which are at their highest level since 2001, have put a damper on Canadian s ..read more

With a market capitalization of $3.5 trillion and 3,502 listed companies, the Toronto Stock Exchange (TSX) is the largest exchange in Canada. It’s also the third largest in North America and the nineth largest in the world. Unfortunately, the TSX has been underperforming its American counterparts by a wide margin over the last decade. The TSX has actually trailed the S&P 500 in eight of the last 10 years. It’s only early March, but by all accounts, it looks like it will finish behind the S&P 500 again in 2024. The TSX is up a respectable 15.4% year-to-date with the S&P 500 having ..read more

Canada’s inflation rate unexpectedly slipped below 3% in January, into the Bank of Canada’s target range of 2% to 3%. There’s still work to do if the central bank wants to get inflation down to 2%, but to do so, it may need to keep interest rates higher for longer. That would be bad news for Canada’s frail economy, which has been straddling a recession since the start of 2023. How Is the Canadian Economy Doing? In the fourth quarter of 2023, Canada’s gross domestic product (GDP) inched up 1%, this is after a 0.5% decrease in the third quarter and a 0.2% fall in the second quarter. Canada’s wea ..read more

The Bank of Canada delivered a pleasant surprise when it announced that the country’s inflation rate slowed more than expected in January to 2.9%. That’s down sharply from 3.4% in December and is lower than the 3.3% reading economists were looking for and the 3.2% mark forecast by the Bank of Canada. Of particular note, this is the first time Canada’s inflation rate has fallen within the central bank’s target range of 1% to 3% since June 2021. One of the most positive signs was the cooling of food inflation, with food prices climbing just 0.1% from December 2023. That represents the weakest mo ..read more

The TSX, Canada’s main stock market index, is made up of some of the largest companies in the country, so it’s natural to expect the performance of the TSX to track Canada’s economic growth. That’s why investors pay close attention to economic gages like gross domestic product (GDP), inflation, employment levels, consumer spending, and the housing market. Positive economic data can boost consumer confidence which can help juice corporate profits. This in turn can energize investor optimism, increase buying activity on the TSX, and push share prices higher. How Is The TSX Doing? The TSX is up 9 ..read more

The Bank of Canada held its key lending interest rate at 5% for the fourth consecutive meeting. Of particular note, the central bank said, for the first time, that it won’t raise interest rates again if the economy moves in line with forecasts. “If the economy evolves broadly in line with the projection we published today, I expect future discussions will be about how long we maintain the policy rate at 5%,” said Bank of Canada Governor, Tiff Macklem at a news conference. This pivot has put potential rate hikes on the back burner with attention now focused on when the first interest rate cut i ..read more

Statistics Canada announced that the country’s inflation rate in December ticked up to 3.4%, which is up from 3.1% in November. The increase was fueled due to gas prices and higher prices at grocery stores. Grocery prices held pat at 4.7% while prices at restaurants have risen by 5.6% over the last year. Housing prices remain strong, rising 6% in December. Rising rent prices are also a big inflationary pressure, up 7.7% in December, up from a 7.4% increase in November. Rents are rising quickly because people, (which includes international students and temporary residents) are competing for ren ..read more