The Bank of Canada raised interest rates for a second straight meeting, keeping the door open for more hikes as it pushed back inflation’s return to its 2% target, Bloomberg News reported. Policymakers led by Governor Tiff Macklem increased the overnight lending rate on Wednesday by 25 basis points to 5%, the highest in 22 years. The move was expected by most economists in a Bloomberg survey, and markets had put the odds at around three quarters. The bank provided little guidance on the future path of borrowing costs in the rate statement.
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Canadian Labor Minister Seamus O’Regan said negotiators have made progress toward a deal to end a strike by dockworkers at some of Canada’s busiest ports and he’s asked a mediator to get a final agreement done, Bloomberg News reported. The strike, which began July 1, has blocked the flow of goods through major maritime hubs on the Pacific coast, including at the Port of Vancouver and Port of Prince Rupert. The disruption has already hampered the exports of commodities and inbound shipments of manufacturing materials, while fertilizer giant Nutrien Ltd.
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The quarterly MNP Consumer Debt Index out this morning showed that Canadians who report being insolvent have reached a record high, the Financial Post reported. More than half of the 2,000 Canadians interviewed for the survey conducted by Ipsos reported that they were $200 or less away from not being able to meet their financial obligations, up six percentage points from the last quarter.
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The Canadian dollar weakened to a three-week low against its U.S. counterpart on Thursday as Wall Street stocks fell and data showed Canada's trade balance swinging to a surprise deficit, Reuters reported. The loonie was trading 0.6% lower at 1.3358 to the greenback, or 74.86 U.S. cents, after touching its weakest intraday level since June 13 at 1.3369. "We had a dreadful trade number," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.
Canada’s economy regained momentum last month, potentially reinforcing the case for a July rate hike even as inflation slowed, Bloomberg News reported. Preliminary data suggest gross domestic product expanded 0.4% during the month, Statistics Canada reported Friday in Ottawa, led higher by manufacturing, wholesale trade and real estate. That followed a flat reading in April, missing expectations for a 0.2% increase in a Bloomberg survey of economists, in part due to a federal workers’ strike. March growth was revised upward to 0.1%.
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Canadian businesses still see inflation running high before edging down slowly, the Bank of Canada said on Friday in a second quarter survey at a time when labor market and wage pressures are seen easing, Reuters reported. Most businesses expect to hire over the next year, but fewer than in the first quarter and about half the number of a year ago. Those seeking to hire expect a labor shortage to be less intense than in previous quarters.
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The Bank of Canada's move to come off the sidelines after a five-month pause has sent a signal that some economic pain will be needed to tame stubborn inflation, leading investors to raise bets on a hard landing for the economy, Reuters reported. The central bank is worried that the Canadian economy is running too hot for inflation to return to its 2% target and that if it waits to act, inflation expectations could rise, making matters worse. Immigration, a key source of strength for the economy, is growing at a record pace.
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The general secretary of Canada Soccer insisted on Monday evening that the organization was not considering bankruptcy, contradicting news reports it was mulling the move to escape the dire financial straits it has been in since the men’s national team qualified for last year’s FIFA World Cup, the Globe and Mail reported. “Absolutely, unequivocally, we are not contemplating bankruptcy,” said Jason deVos, during an interview with The Globe and Mail.
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Canadian inflation slowed to its weakest pace in two years and core measures edged lower, reducing pressure on the central bank for another interest-rate hike next month, Bloomberg News reported. The consumer price index rose 3.4% in May from a year ago, the smallest increase since June 2021, Statistics Canada reported Tuesday in Ottawa. That matched the median estimate in a Bloomberg survey of economists and was down a full percentage point from 4.4% in April. On a monthly basis, the index rose 0.4%, also matching expectations.
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