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☆ TSX starts month on weak note as China slowdown hits sentiment
▼ + stars: | 2023-08-01 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 93.71 points, or 0.5%, at 20,532.93, after posting its highest closing level in three months in the previous session. The materials group, which includes precious and base metals miners and fertilizer companies, lost 1.8% as gold and copper prices fell. Shares of Silvercrest Metals (SIL.TO) were particularly weak, plunging 21.5% after two brokerages cut their price target on the stock. The TSX notched a gain of 2.3% in July, while it has advanced 5.9% since the start of the year.

Persons: Mark Blinch, Robert McWhirter, Fergal Smith, Siddarth, Shilpi Majumdar, Cynthia Osterman Organizations: Toronto Stock Exchange, REUTERS, Metals, Toronto Stock, Selective Asset Management Inc, Canada's, Silvercrest Metals, TSX, Thomson Locations: Toronto, China, Coast, Bengaluru

☆ C$ hits 3-week low as 'cracks' emerge in Canada's economy
▼ + stars: | 2023-08-01 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

A Canadian dollar coin, commonly known as the "Loonie," is pictured in this illustration picture taken in Toronto, January 23, 2015. "The (U.S.) dollar is reasserting itself as the champion of the currency market and the Canadian dollar is just caught in that wave," said Adam Button, chief currency analyst at ForexLive. S&P Global's measure of Canadian manufacturing activity edged higher last month to 49.6 from 48.8 in June. Canada's employment report for July, due on Friday, could offer further clues on the strength of domestic activity. The price of oil, one of Canada's major exports, edged lower on signs of profit-taking after a rally in July.

Persons: Mark Blinch, Adam Button, Fergal Smith, Jonathan Oatis Organizations: REUTERS, greenback, PMI, Canadian, U.S, ., Thomson Locations: Toronto, TORONTO, U.S

☆ Canadian factory activity slows for third straight month in July
▼ + stars: | 2023-08-01 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

[1/2] Factory workers operate machine presses at Abipa Canada in Boisbriand, Quebec, Canada May 10, 2023. The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 49.6 in July from 48.8 in June. "July's PMI results offered a rather mixed bag on the performance of the Canadian manufacturing sector," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. The new orders index, at 49.2, was in contraction for the fifth straight month, although up from 48.5 in June. The port strikes and wildfires limited the improvement in vendor performance, S&P Global said.

Persons: Evan Buhler, Paul Smith, Fergal Smith, Paul Simao Organizations: Canada, REUTERS, Reuters Connect TORONTO, P Global Canada Manufacturing, PMI, P Global Market Intelligence, Bank of Canada, Canada's, P Global, Thomson Locations: Boisbriand, Quebec, Canada, United States

☆ Canadian dollar hits 2-week low as rate hikes 'begin to bite'
▼ + stars: | 2023-07-28 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The loonie was trading 0.1% lower at 1.3240 to the greenback, or 75.53 U.S. cents, after touching its weakest intraday level since July 11 at 1.3249. The data suggests "that underlying momentum is weakening as higher borrowing costs begin to bite," Karl Schamotta, chief market strategist at Corpay, said in a note. Hopes of a soft landing for the U.S. economy boosted Wall Street and the price of oil, one of Canada's major exports. The 10-year was down 8.1 basis points at 3.536%, while it dropped 4.1 basis points further below the U.S. equivalent to a gap of 43.6 basis points. Reporting by Fergal Smith Editing by Alistair BellOur Standards: The Thomson Reuters Trust Principles.

Persons: Karl Schamotta, Fergal Smith, Alistair Bell Organizations: greenback, U.S, Bank, Federal Reserve, Thomson Locations: TORONTO, U.S

☆ Rate convergence keeps Canadian dollar shackled to U.S. counterpart
▼ + stars: | 2023-07-27 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

Money markets are pricing in a peak interest rate of about 5.25% for the Bank of Canada over the coming months, not much less than the 5.42% terminal rate that is priced in for the Fed. Canadian GDP data for May, due on Friday, could guide expectations for additional BoC rate hikes. The Canadian dollar was trading 0.2% lower at 1.3227 to the greenback, or 75.60 U.S. cents, after moving in a range of 1.3159 to 1.3236. "The Canadian dollar still looks cheap relative to where it should be," Osborne said, pointing to recent convergence of Canadian and U.S. yields, improved risk appetite and higher commodity prices. The Canadian 5-year yield touched its highest since December 2007 at 4.030% before dipping to 4.019%, up 13.9 basis points on the day.

Persons: Price, Shaun Osborne, Osborne, Fergal Smith, Nick Zieminski Organizations: greenback, Canadian, Bank of Canada, Federal Reserve, European Central Bank, Scotiabank, Fed, BoC, Thomson Locations: TORONTO, U.S

☆ Analysis: Is Canadian core inflation about to crack? July data could offer hope
▼ + stars: | 2023-07-25 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

The monthly increases for both measures have been 0.3% or less in seven of the last eight months. The BoC, which will release minutes from its July meeting on Wednesday, has said it doesn't want to tighten more than is needed. Canadians are particularly sensitive to higher borrowing costs after loading up on debt in recent years as house prices soared. The July inflation data is due for release on Aug. 15. Reporting by Fergal Smith; Editing by Denny Thomas and Jonathan OatisOur Standards: The Thomson Reuters Trust Principles.

Persons: Benjamin Reitzes, Reitzes, Royce Mendes, Mendes, Fergal Smith, Denny Thomas, Jonathan Oatis Organizations: TORONTO, Bank, Canada's, BoC, BMO Capital Markets, Reuters Graphics Reuters, Bank of Canada, Desjardins, Thomson Locations: Helpfully

☆ Canadian housing starts jump 41% in June - CMHC
▼ + stars: | 2023-07-18 | by ( ) www.reuters.com time to read: 1 min

TORONTO, July 18 (Reuters) - Canadian housing starts rose 41% in June compared with the previous month, the largest increase in the last 10 years, led by groundbreaking on multiple unit urban homes, data from the national housing agency showed on Tuesday. The seasonally adjusted annualized rate of housing starts rose to 281,373 units in June from a revised 200,018 units in May, the Canadian Mortgage and Housing Corporation (CMHC) said. Economists in a Reuters poll had expected starts to increase to 220,000 in June. Reporting by Fergal Smith; Editing by Andrew HeavensOur Standards: The Thomson Reuters Trust Principles.

Persons: Fergal Smith, Andrew Heavens Organizations: TORONTO, Canadian Mortgage and Housing Corporation, Thomson

OTTAWA, July 18 (Reuters) - Canada's annual inflation rate dropped more than expected to a 27-month low of 2.8% in June, data showed on Tuesday, led by lower energy prices while food and shelter cost increases persisted. Month-over-month, the consumer price index was up 0.1%, Statistics Canada said, which was also lower than the 0.3% forecast. "Inflation is definitely moving in the right direction, but we're seeing stickier and more persistent core measures," said Michael Greenberg, senior vice president and portfolio manager at Franklin Templeton Investment Solutions. The average of two of the Bank of Canada's (BoC) core measures of underlying inflation, CPI-median and CPI-trim, came in at 3.8% compared with 3.9% in May. "The Bank of Canada's preferred measures of core inflation, which exclude significant moves in individual categories, show that underlying price pressures remain sticky," said Royce Mendes, head of macro strategy at Desjardins Group.

Persons: stickier, Michael Greenberg, Royce Mendes, Mendes, We're, Jules Boudreau, Ismail Shakil, Steve Scherer, Fergal Smith, Nivedita Balu, Dale Smith, Will Dunham, Alexandra Hudson Organizations: OTTAWA, Reuters, Statistics, Bank of Canada's, Franklin Templeton Investment Solutions, Canada's, Desjardins Group, The Bank of Canada, Mackenzie Investments, Canadian, Alexandra Hudson Our, Thomson Locations: Statistics Canada, Mackenzie, China, Ottawa, Toronto

Macklem came under a rare attack last year from opposition politicians for misjudging inflation and locking in to a rigid forward guidance. "We are turning the corner on inflation," Macklem told reporters in January when the BoC became the first major central bank to announce a pause. The central bank's tightening campaign is a major concern for Canadians who loaded up on cheap mortgages and took on credit card and other debt in recent years. "Now maybe you're getting a certain maturity of the central bank that says, 'We're not going to do that again,'" Holt said. He assured Canadians during the pandemic that rates would rise only in 2023 when it expected the economic slack to be absorbed, but the central bank began hiking rates in March 2022 as inflation spiked.

Persons: Derek Holt, Macklem, Holt, Marc Chandler, Steve Scherer, Fergal Smith, Denny Thomas, Matthew Lewis Organizations: OTTAWA, Bank of Canada, BoC, Scotiabank ., Canadian Real Estate Association, Bannockburn Global Forex, Thomson Locations: Bannockburn, Ottawa, Toronto

After a five-month pause, the BoC raised its overnight rate in June, saying monetary policy was not sufficiently restrictive. "If new information suggests we need to do more, we are prepared to increase our policy rate further," BoC Governor Tiff Macklem told reporters after the decision. The BoC's overnight target rate was last at 5.00% in March and April of 2001. Twenty of 24 economists surveyed by Reuters had expected the central bank to lift rates by a quarter of a percentage point. Money markets had seen a more than a 70% chance of a rate hike before the announcement.

Persons: Derek Holt, Andrew Kelvin, Steve Scherer, Ismail Shakil, Fergal Smith, Divya Rajogopal, Nivedita Balu, Paul Simao, Mark Porter Organizations: OTTAWA, Bank of Canada, Wednesday, BoC, Scotiabank, Reuters, TD Securities, Thomson Locations: Canada, Toronto

☆ Bank of Canada expected to hike rates as economy outperforms
▼ + stars: | 2023-07-12 | by ( Steve Scherer | ) www.reuters.com time to read: +2 min

"We expect the Bank of Canada to raise its policy rate to 5.00% and leave the door open to more hikes this fall." Twenty of 24 economists surveyed by Reuters expect the central bank to lift rates by another quarter of a percentage point and then hold them there well into 2024. Money markets see more than a 70% chance of a rate hike on Wednesday, and are fully pricing in such a move by September. Canada added far more jobs than expected in June, according to data published on Friday. "And let's face it, inflation is still above the Bank of Canada's 2% target."

Persons: Royce Mendes, Tiago Figueiredo, Doug Porter, Porter, Steve Scherer, Fergal Smith, Paul Simao Organizations: OTTAWA, Bank of Canada, BoC, Bank of Canada's, Group, Reuters, BMO Capital Markets, Thomson Locations: Canadian, Canada

☆ Bank of Canada seen hiking rates quarter point to tame stubborn inflation
▼ + stars: | 2023-07-10 | by ( Steve Scherer | ) www.reuters.com time to read: +2 min

In June, the central bank raised its overnight rate to a 22-year high of 4.75% after a five-month pause, saying monetary policy was not restrictive enough. Data in the past month showed some signs of a slowdown - inflation cooling to 3.4%, a tepid May jobs report and a surprise trade deficit in May. "We expect the BoC to take the policy rate 25 basis points higher to 5%." Twenty of 24 economists surveyed by Reuters expect the bank to lift rates by another quarter-point and then hold well into 2024. Reporting by Steve Scherer, additional reporting by Fergal Smith; Editing by David GregorioOur Standards: The Thomson Reuters Trust Principles.

Persons: Jay Zhao, Murray, Andrew Grantham, Steve Scherer, Fergal Smith, David Gregorio Our Organizations: OTTAWA, Bank of Canada, BoC, Monex, Reuters, CIBC Capital Markets, Thomson Locations: Canada

☆ Canadian port strike talks resume, supported by federal mediators
▼ + stars: | 2023-07-09 | by ( ) www.reuters.com time to read: +1 min

The BCMEA and the International Longshore and Warehouse Union Canada (ILWU Canada) met on Saturday, supported by federal mediators, the statement said. Some 7,500 port workers went on strike on July 1 for higher wages, upending operations at the Port of Vancouver and Port of Prince Rupert - key gateways for exporting the country's natural resources and commodities as well as for bringing in raw materials. ILWU Canada did not immediately reply to a request for comment. The Canadian Manufacturers & Exporters (CM&E) industry body said the strike is disrupting C$500 million ($377 million) in trade every day. ($1 = 1.3271 Canadian dollars)Reporting by Fergal Smith; Editing by Mark PorterOur Standards: The Thomson Reuters Trust Principles.

Persons: Port of Prince Rupert, Saturday Alberta Premier Danielle Smith, BCMEA, Fergal Smith, Mark Porter Organizations: TORONTO, British Columbia Maritime Employers Association, Warehouse Union, Port, Saturday Alberta Premier, ILWU Canada, Canadian Manufacturers, Thomson Locations: Pacific Canada, British, Canada, Port of Vancouver, Port of, Vancouver

☆ Canada port strike may add to inflation concerns ahead of rate decision
▼ + stars: | 2023-07-06 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

[1/3] A view shows placards as longshoremen with the International Longshore and Warehouse Union Canada (ILWU) strike outside the Port of Vancouver's Neptune Bulk Terminals in North Vancouver, British Columbia, Canada July 5, 2023. Some 7,500 dock workers went on strike on Saturday for higher wages, upending operations at two of Canada's three busiest ports, the Port of Vancouver and Port of Prince Rupert. Money markets expect the central bank to tighten further, possibly as soon as at a policy decision next Wednesday. The Canadian Manufacturers & Exporters (CM&E) industry body said the strike is disrupting C$500 million in trade every day. ($1 = 1.3360 Canadian dollars)Reporting by Fergal Smith, editing by Steve Scherer and Josie KaoOur Standards: The Thomson Reuters Trust Principles.

Persons: Chris Helgren, Port of Prince Rupert, Andrew Grantham, Seamus O'Regan, It's, Robert Kavcic, Fergal Smith, Steve Scherer, Josie Kao Organizations: Warehouse Union, REUTERS, TORONTO, Bank of Canada, BoC, CIBC Capital Markets, Bank of, Reuters, Twitter, Canadian Manufacturers, BMO Capital Markets, Thomson Locations: of, North Vancouver, British Columbia, Canada, Port of Vancouver, Port of, Bank of Canada

☆ Canadian dollar edges higher as oil prices climb
▼ + stars: | 2023-07-04 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

Summary Canadian dollar strengthens 0.2% against the greenbackPrice of U.S. oil increases 2%Canada manufacturing PMI dips to 48.8 in JuneCanadian bond yields rise across the curveTORONTO, July 4 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices rose and despite domestic data that showed factory activity slowing further in June. Speculators have slashed their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. The price of oil , one of Canada's major exports, climbed 2% to $71.16 a barrel as markets weighed August supply cuts by top exporters Saudi Arabia and Russia against a weak global economic outlook. Contraction in Canada's manufacturing sector deepened slightly in June as an uncertain economic outlook weighed on both domestic and foreign demand. Canadian government bond yields were higher across the curve, with the 10-year up 6.4 basis points at 3.335%.

Persons: greenback Price, Fergal Smith, Josie Kao Organizations: greenback, Canadian, U.S, U.S . Commodity Futures Trading, P Global Canada Manufacturing, Bank of Canada, BoC, Thomson Locations: Canada, TORONTO, Saudi Arabia, Russia

The central bank is worried that the Canadian economy is running too hot for inflation to return to its 2% target and that if it waits to act, inflation expectations could rise, making matters worse. The central bank lifted its benchmark rate to a 22-year high of 4.75% this month and is expected to tighten further in July or September. A hard landing for the economy, or a recession, could raise unemployment, something the BoC has been hoping to avoid. "I'm not going to be betting against interest rates and I'm not going to be betting against policy lags." The data has left analysts pushing back their forecasts of a slowdown to later in 2023 or in 2024 but accompanied by higher than anticipated interest rates.

Persons: Karl Schamotta, David Rosenberg, I'm, Royce Mendes, Fergal Smith, Steve Scherer, Denny Thomas, Stephen Coates Organizations: TORONTO, Bank, Bank of Canada's, BoC, Bank of Canada, Rosenberg Research, Desjardins, Thomson Locations: United States, Data, Toronto, Ottawa

☆ Canadian dollar hits 2-week low as rate hike bets recede
▼ + stars: | 2023-06-28 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The loonie was trading 0.5% lower at 1.3250 to the greenback, or 75.47 U.S. cents, after touching its weakest intraday level since June 15 at 1.3276. "The market is losing confidence that the Bank of Canada will hike again next month," said Adam Button, chief currency analyst at ForexLive. Money markets see a 55% chance of a rate hike at the Bank of Canada's next policy decision on July 12, down from 64% before data on Tuesday that showed inflation easing to its slowest pace in two years. "The Bank of Canada is going to see economic weakness developing in Canada." One potential measure of support for the loonie was a rebound in the price of oil, one of Canada's major exports.

Persons: Adam Button, Button, Jerome Powell, Fergal Smith, Jonathan Oatis Organizations: greenback, Canadian, U.S, Bank of Canada, Bank of, of Canada, U.S ., Thomson Locations: TORONTO, Bank of Canada, Bank of Canada's, Canada

Variable rate mortgages in Canada typically require borrowers to make regular payments in fixed amounts. WHAT IS THE EXTENT OF MORTGAGE AMORTIZATION EXTENSION? Both banks had no variable-rate mortgages with amortizations greater than 30 years prior to the start of rate hikes. If interest rates stay high over the next few years, as the central bank has warned, it raises questions about customers' ability to service bigger than anticipated debt at higher rates during renewals. The big banks said most customers are able to cope with higher interest rates as they had passed a rigorous stress test to handle higher interest rates.

Persons: Royce Mendes, Carolyn Rogers, OSFI, Nivedita Balu, Fergal Smith, Steve Scherer, Denny Thomas, Conor Humphries Organizations: TORONTO, Statistics Canada, Royal Bank of Canada, CIBC, Bank of Nova, National Bank, Bank of Canada, BoC, Thomson Locations: Canada, United States, Bank of Nova Scotia, amortization, Toronto, Ottawa

The economy shed a net 17,300 jobs in May, entirely in full-time work, while the jobless rate inched up to 5.2%, Statistics Canada said. Analysts surveyed by Reuters had forecast a net gain of 23,200 jobs and for the unemployment rate to edge up to 5.1% in May after staying at 5.0% since December. A series of surprisingly strong economic data and stubbornly high inflation led the Bank of Canada to raise its overnight rate to a 22-year high of 4.75% on Wednesday. "While this is an ugly set of jobs data, the labour force survey is notoriously volatile," said Royce Mendes, head of macro strategy at Desjardins Group. Reports on jobs, inflation and gross domestic product are due out ahead of the next policy announcement on July 12.

Persons: Andrew Grantham, Paul Beaudry, Beaudry, Royce Mendes, Ismail Shakil, Steve Scherer, Fergal Smith, Dale Smith, Susan Fenton, Nick Macfie, Jonathan Oatis Organizations: OTTAWA, Statistics, Reuters, Bank of Canada, Bank of, CIBC Capital Markets, Desjardins Group, Canadian, Thomson Locations: Canada, Statistics Canada, Bank of Canada, Ottawa, Toronto

OTTAWA, June 7 (Reuters) - The Bank of Canada on Wednesday hiked its overnight rate to a 22-year high of 4.75%, and markets and analysts immediately forecast yet another increase next month to ratchet down an overheating economy and stubbornly high inflation. Noting an uptick in inflation in April and the fact that three-month measures of core inflation remained high, the Bank of Canada (BoC) said that "concerns have increased that CPI inflation could get stuck materially above the 2% target." However, Canada Finance Minister Chrystia Freeland said the economic rebound from the COVID-19 pandemic and Russia's invasion of Ukraine has been stoking price increases. "To bring demand lower, which is the bank's goal to achieve their 2% inflation target, we just simply need more tightening." The BoC said it would continue to assess economic indicators going forward to see if they "are consistent with achieving the inflation target."

Persons: Derek Holt, Paul Beaudry, Canada's, Pierre Poilievre, Justin Trudeau, Chrystia Freeland, Andrew Kelvin, Steve Scherer, David Ljunggren, Fergal Smith, Divya Rajagopal, Nivedita Balu, Mark Porter Organizations: OTTAWA, Bank of Canada, Wednesday, Canadian, Scotiabank, BoC, Conservative Party, Liberal, Canada Finance, TD Securities, Thomson Locations: British Columbia, Ukraine, Canada, Toronto

☆ Analysis: Strong economy puts Bank of Canada's 4-month rate hike pause in doubt
▼ + stars: | 2023-06-05 | by ( Steve Scherer | ) www.reuters.com time to read: +4 min

Inflation, which peaked at 8.1% last year, accelerated for the first time in 10 months in April to 4.4%, more than double the Bank of Canada's 2% target. The recent recovery in Canada's housing market is also putting pressure on prices, analysts say. "The Bank of Canada's penchant for surprising traders means that nothing can be ruled out," said Royce Mendes, head of macro strategy at Desjardins Group. Mendes said there could be more than one rate hike in the cards, and Canadians should "brace themselves for a further tightening in financial conditions this summer". "The latest round of data adds weight to our view that the Bank will need to conduct an insurance rate hike at either of its next two meetings," said Jay Zhao-Murray, FX analyst at Monex Canada.

Persons: Stephen Brown, Royce Mendes, Mendes, Macklem, Jay Zhao, Murray, Steve Scherer, Fergal Smith, Denny Thomas, Daniel Wallis Organizations: OTTAWA, Bank of Canada, BoC, Bank of Canada's, North, Capital Economics, Reuters, Federal Reserve, Desjardins Group, Monex Canada, Thomson Locations: North America, United States, States

While a federal election is not due until 2025, housing affordability is among the top concerns for Canadians who have grappled with supply shortages. The Liberal Party government's ambitious plan to welcome 500,000 immigrants per year by 2025, or about 1.25% of its population, is expected to fuel robust demand for housing. In April 2022, the Liberal government announced plans to double housing construction over the next decade. It's been 8 years (since he took power), and now, housing costs have doubled," Poilievre said on Twitter earlier this month. Speaking with the heads of Canada's municipalities last week, Trudeau said the government's next "long term infrastructure" plan will be revealed this autumn.

Persons: Justin Trudeau, Randall Bartlett, Bartlett, Pierre Poilievre, Trudeau, Poilievre, Darrell Bricker, they're, Bricker, James Laird, Laird, Fergal Smith, Steve Scherer, Marguerita Choy Organizations: TORONTO, Bank of Canada, Liberal Party, Desjardins, Liberal, Housing, Canada Mortgage, Housing Corporation, Canadian Home Builders ' Association, Reuters, Conservative Party, Twitter, Toronto Area, Public Affairs, Thomson Locations: Toronto, Ottawa

☆ Rising risk appetite lifts Canadian dollar to two-week high
▼ + stars: | 2023-06-01 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The loonie was trading 0.9% higher at 1.3445 to the greenback, or 74.38 U.S. cents, after touching its strongest intraday level since May 16 at 1.3434. The U.S. House of Representatives passed a bill to suspend the U.S. debt ceiling on Wednesday evening. The Senate will stay in session until it passes the measure, Democratic Majority Leader Chuck Schumer said on Thursday. The rebound in oil prices was also supportive of the loonie, Sahota said. Domestic data showed manufacturing activity slowed in May as high inflation and inventory cutting held back customer demand.

Persons: Amo Sahota, Chuck Schumer, Sahota, Fergal Smith, Will Dunham Organizations: U.S, Canadian, FX, The U.S . House, Democratic, Wall, P Global Canada Manufacturing, Thomson Locations: TORONTO, U.S, Australia, New Zealand, San Francisco, The

April's unexpected acceleration in inflation to 4.4% from 4.3% in March has some economists forecasting a hike later this year. "Inflation has come down. We expect it will continue to come down," Macklem said when asked about the inflation figures published this week. He did, however, acknowledge that April inflation "did come in stronger than we expected." "While most households are proving resilient to increases in debt-servicing costs, early signs of financial stress are emerging," particularly among recent home buyers, according to the so-called Financial System Review.

☆ Canada housing market upturn could delay shift to BoC rate cuts
▼ + stars: | 2023-05-14 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

The housing market's upturn comes after the Bank of Canada paused its interest rate hiking campaign last month, leaving the benchmark rate at a 15-year high of 4.50% since January. A rebound in the housing market could boost activity and contribute directly to price pressures. "The Bank of Canada at the end of the day is probably not going to be too thrilled if the housing market really starts to ramp up," said Robert Kavcic, a senior economist at BMO Capital Markets. In addition, variable-rate borrowers have been sheltered from higher interest rates after lenders temporarily extended the period over which their debt is amortized, keeping their payments the same. But there are also tailwinds to support a recovery, including supply shortfalls, record immigration and labor market strength, analysts said.

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