Gross domestic product was flat in August, preliminary data from Statistics Canada show, after gaining just 0.1% in July and June. Since April, growth has averaged just 0.1% on a monthly basis.
Market reaction was muted. The Canadian dollar dipped about 0.1% to C$1.37 per US dollar as of 9:06 am in Toronto. Yields on two-year bonds were little changed at 3.8%. “After a solid first half of the year, momentum appears to be slowing as multi-decade high inflation and rapidly rising interest rates weigh on the economy,” Benjamin Reitzes, a rates strategist with Bank of Montreal at Bank of Montreal, said in a report to investors.
While the slowdown won’t be enough to stop the Bank of Canada from delivering another interest rate hike next month, policymakers will be closely monitoring the extent of softness in the economy to see how high they need to go to rein in inflation to the 2% target.
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