Labour market key for Bank of Canada interest rate decisions: CIBC

Read full articleCIBC economists say that labour market indicators will be the key factor in terms of when the central bank decides to halt its tightening cycle and even potentially lower rates.

"For decades, the Bank largely ascribed accelerations or decelerations in trend inflation to whether real GDP would run above or below its estimate for Canada's non-inflationary potential: the so-called 'output gap'," the economists wrote. The economists wrote that measuring the output gap has always been challenging, but it became particularly difficult in 2021 when real GDP was still below pre-pandemic levels but labour markets were tight.

"All of this has meant that the starting point for the output gap, and subsequent growth rates, no longer gave stable guidance on whether the economy was overheating and likely to push inflation up or down. An inflation-targeting central bank, and financial market participants, needed a new signpost to follow."

Loans Loans Latest News, Loans Loans Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Canadian banks' profits seen pressured by slower dealmaking, mortgage growthCanada's big bank results are expected to bring to light a number of challenges as lenders set aside more funds for bad loans in a tough economy that has also led to a slowdown in dealmaking and forced borrowers to rethink about new mortgages. 'We expect another challenging quarter for the group,' KBW analyst Mike Rizvanovic said, adding that he expects slowing loan growth, higher expenses and higher provisions for credit losses. The shares of the top five banks - Royal Bank of Canada, TD Bank, Bank of Montreal, Bank of Nova Scotia and CIBC - have lost between 2% and 8% so far this year.
Source: YahooFinanceCA - 🏆 47. / 63 Read more »

Peter Hall: Why the Bank of Canada should ignore the July inflation spikeIt’s preliminary at best to conclude that the latest inflation data force the Bank of Canada into further interest rate increases. Read on.
Source: financialpost - 🏆 7. / 85 Read more »

Peter Hall: Why the Bank of Canada should ignore the July inflation spikeIt’s preliminary at best to conclude that the latest inflation data force the Bank of Canada into further interest rate increases. Read on.
Source: fpinvesting - 🏆 43. / 63 Read more »