November 21, 2024
Bank of Canada expected to deliver jumbo interest rate cut this morning #CanadaFinance

Bank of Canada expected to deliver jumbo interest rate cut this morning #CanadaFinance

CashNews.co

A string of soft economic data sets the stage for a 50 basis point rate cut from the Bank of Canada, according to Capital Economics. The data releases include shelter costs, which governor Tiff Macklem called “still much too high” last month.

Bradley Saunders, North America economist for Capital Economics, highlights a 0.1 per cent month-over-month increase in the shelter component of September’s consumer price index report.

“That was the smallest monthly gain in almost two years and largely reflected softer rent growth, suggesting recent increases in new housing supply and the government’s cap on international student numbers are having an impact,” he wrote in a recent note to clients.

Macklem told reporters last month that this essential category, which includes items like rent and home repair as well as housing prices, is starting to come down.

“Second, there has been an especially sharp downturn in purpose-built rental starts nationally, mirroring the slowdown in rent growth,” Saunders added. “With falling population growth a headwind to the rental market, starts seem likely to remain relatively low.”

While the data may give the BoC more confidence to deliver deeper rate cuts, a new poll suggests high rental and grocery costs continue to put pressure on households.

According to the Angus Reid Institute, renters continue to have a difficult time, with three in five saying their monthly payment is tough or very difficult to keep up with. When it comes to groceries, 51 per cent of those surveyed say it’s challenging to pay for household food needs.