Canadian Central Bank update- Recent job trends and GDP numbers

Observing the data since the last three quarters on inflation, most central banks are still grappling with the issue of bringing to their targeted levels. Though the target is said to have been met,  the Canadian central bank thinks that it will come with its own set of risks.

The recent economic indicators have seen no fluctuation, posing an alarm to the central bank. This if said to continue in a long phase of time frame would lead to a deflationary phase- posing a threat to the economy. Over time if they keep their central bank rates pegged at 3.75 percent. Unemployment and home mortgages will be the high-priority issues the central bank must tackle.

Since most of the traders and stockbrokers are looking at another 50-basis point cut, the Deputy Chief of the Central Bank of Canada reiterates that the need for policies to be restrictive would not be necessary.

Overall if a deflationary situation is said to set in, the people would put off their purchases as the prices of most of the commodities would remain relatively high. The wait for the prices to go down would put the economy in a deflationary phase which would make it hard to overcome.

The GDP for Canada in Q3 2024 is said to have grown at the slightest, at 0.1 percent, which is lower than it was anticipated. But the central bank also feels that the last quarter is off to a slow start. To check the progress at the beginning of next year, the employment numbers are said to have increased by 10,000 jobs. However, unemployment increased to 6.7 percent in November compared to 6.5 percent in October. This is not a good sign for the economy.

Final Decision of the Canadian Reserve….

As anticipated, the Bank of Canada has cut its interest rates by 50 basis points, which comes to 3.25 percent. It is a step towards the battle against the rise in unemployment and inflation. The rate cut is said to be an opportunity to bring more acceleration to the economy. The current ease in the policy position of the central bank is said to be a welcome move by economists. Considering the trade restrictions imposed by their immediate neighbor, the United States of America, more cuts could come in 2025. Though the outlook is not so great for 2024, it is anticipated to show some improvement next year.