Bank of Canada has a reason to raise the rate
2023.01.20 12:41
Bank of Canada has a reason to raise the rate
By Tiffany Smith
Budrigannews.com – According to data released on Friday, Canadian retail sales decreased by 0.1% in November compared to the previous month before recovering in December. This data, in addition to other recent data on prices and jobs, suggests that the interest rate will rise again next week.
Analysts had anticipated a 0.5% decline in monthly sales in November, but it was less than that. According to Statistics Canada, retail sales decreased by 0.4% in November compared to October.
According to Statscan’s flash estimate, sales probably increased by 0.5 percent in December.
According to an economist at BMO Capital Markets, Shelly Kaushik, the positive estimate for December “suggests sales recovered… as Canadian consumers continue to prove resilient in the face of aggressive rate hikes.”
The Bank of Canada has increased its benchmark interest rate by a record 400 basis points in nine months, bringing it to 4.25 percent. Following the most recent increase, the bank stated that any subsequent rate increases would be more data-dependent. On January 25, the bank will announce its next policy decision.
According to the most recent data on the economy, Canada saw a massive net gain of 104,000 jobs in December, but core measures of inflation were little changed from the previous month.
Royce Mendes, head of macro strategy at Desjardins Group, wrote in a note that “ongoing economic momentum will likely prompt the Bank of Canada to raise rates another 25bps next week.”
According to the money markets, the Bank of Canada’s quarter-point increase next week is about 70% likely.
