The Bank of Canada on Wednesday announced it would once again be holding the overnight interest rate steady at 4.5 per cent for a second time in a row.
The latest consumer price index report showed Canada's inflation rate had slowed to 5.2 per cent, the lowest it's been in over a year. Bond yields in Canada have also fallen, suggesting the market is betting on future interest rate cuts. But even as inflation continues to cool, economists are split on when we can eventually see lower interest rates.
Sal Guatieri, senior economist and director at BMO Capital Markets, says he's not expecting a rate cut until "early next year."
"If we see much more weakness in the economy -- a real recession -- yes, the Bank of Canada almost certainly would swing into action in reverse gears and cut interest rates," he told CTV News Channel on Wednesday. "But we don't see that. We just see a very mild downturn and growth resuming by the end of this year."
Rather than a sharp recession, Guatieri says BMO is forecasting a "technical downturn in the next couple of quarters," one he expects will be "very mild, very shallow" and over by the end of this year.
"Canada has kind of mixed as to whether we will slip into recession. The general forecast calls for continued growth, very modest growth for the rest of this year, but they're not ruling out the possibility that we could see small declines for a quarter or two this year. So that could meet the technical definition of recession," he said.
Meanwhile, Randall Bartlett, senior director of Canadian economics at Desjardins Economics, is projecting the given how fast inflation has been slowing, and how some banks in the U.S. have run into trouble in the last month.
"Most importantly, inflation has come down faster than the Bank had previously anticipated and financial conditions have tightened on the back of banking sector turbulence outside of our borders," he wrote in a research note on Wednesday. "Together, these look to have outweighed the sustained strength in the Canadian economy and labour market."
Canada also continues to have a strong job market. In the last labour report, StatCan reported Canada gained 35,000 jobs while the unemployment rate was unchanged at 5.0 per cent, which is near record lows.
"Canadian households continue to benefit from significant government financial supports with a job market at full employment. The combination has reignited consumer spending through the first quarter of this year. With government policy at odds with the central bank, economists from TD wrote in a research note on Thursday.
The economists also said in order for rate cuts to occur, there would need to be "a convincing slackening in the job market and erosion in economic momentum."
"This places the timing close to year-end or early 2024. In other words, just as the rate hike cycle started in Canada and the U.S. in close alignment, so too will the rate cut cycle," they wrote.
When asked about whether rate cuts are on the horizon, Bank of Canada governor Tiff Macklem told reporters on Wednesday the rate cuts the bond markets have been anticipating "don't look like the most likely scenario to us," and didn't rule out a future rate hike to get inflation down to two per cent.
Despite Macklem's attempts to quell speculation in the market that a rate cut is on it way, Derek Holt, head of Capital Markets Economics at Scotiabank, says the
"The BoC almost always shows itself to be fully under control of inflation — even when it obviously isn’t -- by showing a return to two per cent inflation as if magically within a medium-term horizon. Maybe if you stopped showing that wishful thinking you wouldn’t have markets pricing rate cuts from restrictive levels above neutral," Holt wrote in a research note on Wednesday.
Conservative Leader Pierre Poilievre and NDP Leader Jagmeet Singh got into a heated exchange in the House of Commons on Thursday, just minutes after Singh announced his party would not be supporting the Conservatives' first non-confidence motion against Prime Minister Justin Trudeau's government.
The province's public security minister said he was "shocked" Thursday amid reports that a body believed to be that of a 14-year-old boy was found this week near a Hells Angels hideout near Quebec City.
Shamattawa RCMP are searching for a missing six-year-old boy who hasn’t been seen since Wednesday morning.
B.C.'s police watchdog is investigating the death of a woman who was shot by the RCMP after allegedly barricading herself in a room with a toddler early Thursday morning.
Prime Minister Justin Trudeau tapped Treasury Board President Anita Anand to take on additional duties as Canada's minister of transport on Thursday.
CTV News has learned there are multiple Canadian women alleging they were victims of sexual abuse at the hands of the late Harrods boss Mohamed Al Fayed.
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Shohei Ohtani became the first major league player to hit 50 home runs and steal 50 bases in a season, with the Los Angeles Dodgers star going deep twice to reach the half-century mark and swiping two bags to get to 51 against the Miami Marlins on Thursday.
Quebec Premier Francois Legault is calling on the Bloc Quebecois to topple the Trudeau government next Wednesday and trigger a federal election.
B.C.'s police watchdog is investigating the death of a woman who was shot by the RCMP after allegedly barricading herself in a room with a toddler early Thursday morning.
Shamattawa RCMP are searching for a missing six-year-old boy who hasn’t been seen since Wednesday morning.
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The Royal Canadian Mounted Police has lost 205 firearms since 2020, including more than 120 handguns and at least five fully automatic weapons like machine-guns.
The lawyer for a B.C. RCMP officer convicted of obstruction for telling a witness to delete cellphone video following the violent 2017 arrest of Dale Culver has requested a stay of proceedings.
The province's public security minister said he was "shocked" Thursday amid reports that a body believed to be that of a 14-year-old boy was found this week near a Hells Angels hideout near Quebec City.
A federal law enforcement agency confirmed it's opened an investigation into Robert F. Kennedy Jr. after he allegedly cut off the head of a dead whale and took it home two decades ago.
A judge in a rural Kentucky county was shot and killed in his courthouse chambers Thursday, and the local sheriff was charged with murder, police said.
Israel warned U.S. Defence Secretary Lloyd Austin in a call Tuesday that a military operation was going to take place in Lebanon but gave no details, U.S. officials said Thursday. The same day of the call, in an attack widely blamed on Israel, thousands of pagers belonging to Hezbollah militants exploded.
A 22-year-old woman who became an abortion rights advocate after she was raped by her stepfather as a child tells her story in a new campaign ad for Democratic presidential nominee Kamala Harris.
South Korea’s government, western countries and adoption agencies worked in tandem to supply some 200,000 Korean children to parents overseas, despite years of evidence they were being procured through questionable or downright unscrupulous means, an investigation led by The Associated Press found.
Israeli security services said on Thursday they had arrested an Israeli citizen on suspicion of involvement in an Iranian-backed assassination plot targeting prominent people including Prime Minister Benjamin Netanyahu.
The head of Via Rail repeatedly told MPs a train delay over the Labour Day long weekend was an isolated incident, despite a similar event two years ago.
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Prime Minister Justin Trudeau tapped Treasury Board President Anita Anand to take on additional duties as Canada's minister of transport on Thursday.
Ontario’s Minister of Sport, Neil Lumsden, will donate his brain to research.
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Lebanese authorities on Thursday banned walkie-talkies and pagers from being taken on flights from Beirut airport, the National News Agency reported, after thousands of such devices exploded during a deadly attack on Hezbollah this week.
NASA scientists have successfully replicated spider-like shapes found on the surface of Mars in a laboratory setting for the first time.
Lawyers representing the producers of 'Russians at War' say they may pursue legal action against Ontario's public broadcaster for pulling support for the controversial documentary amid outcry from the Ukrainian community and some Canadian politicians.
Viewers of Jeopardy got a chance to test their knowledge of trivia about B.C.'s biggest city Wednesday night.
British actress Florence Pugh has revealed that shaving her head for her latest movie role was a 'really bizarre' experience that sent her body 'into a bit of trauma.'
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Nike Inc. said Thursday it has named Elliott Hill as its president and CEO, replacing John Donahoe, who will retire next month.
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Shohei Ohtani became the first major league player to hit 50 home runs and steal 50 bases in a season, with the Los Angeles Dodgers star going deep twice to reach the half-century mark and swiping two bags to get to 51 against the Miami Marlins on Thursday.
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The Parole Board of Canada says a man who assaulted a young pregnant woman and left her for dead remains too dangerous to be released into the community.
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The mayor of Fort Saskatchewan apologized on Thursday for comments she made earlier this week about killing feral cats.
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A union representative says someone driving a pick-up truck with heavily tinted windows rammed a member on Western Road, near Elborn College.
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A growing group of brides and wedding photographers from across the province say they have been taken for tens of thousands of dollars by a Barrie, Ont. wedding photographer.
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SERVEONE Canada, a global procurement solution company, has begun Canadian operations in Tecumseh.
Enrolment may be down at St. Clair College, but President Mike Silvaggi isn’t bothered.
In a rare move, the Greater Victoria School District Board of Education has been slapped with a ministerial order from the province requiring it to update a student safety plan – drawing concern around political posturing leading up to an election.
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A 16-year-old biennial event aimed at fostering business in the country's eastern Arctic and northern regions has been cancelled indefinitely as a dispute unfolds between Inuit in Canada and a Labrador group claiming to share their heritage.
Jim Lester’s farm hopped on the cow-cuddling trend in early August, and his time slots have been pretty well sold out ever since.
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