“I would say if (the Bank of Canada) did not cut rates next week, it would be a sign of a much greater willingness to push the economy into recession just to get inflation down a few tenths of a percentage point further.”
Statistics Canada’s latest retail sales report on Friday showed that Canadians held back on spending in May as retail sales fell 0.8% to $66.1 billion.
Sales fell in eight of the nine subsectors monitored, the agency said.
“The Bank of Canada is simply trying to reduce the restrictions it is imposing on the economy. It is not trying to stimulate the economy, it is just trying to reduce the headwinds it is creating,” Mendes said, adding that a second rate cut could restore Canadian consumers’ confidence in spending.
Why Canada’s employment numbers matter
Latest Canadian labour market data shows that the economy stalled in June, with 1,400 jobs lost while the unemployment rate rose to six.4 percent from 6.2 percent in May.
The June reading was the best unemployment rate since January 2022, one other indication that increases the likelihood that the Bank of Canada will cut rates of interest this week.
Although most market observers expect a rate cut this week and further cuts to follow later within the yr, there isn’t a consensus on this.
Clay Jarvis, mortgage and real estate expert at NerdWallet Canada, said this week’s decision could go either way.
