The Canadian economy saw modest expansion in 2024's third quarter, paving the way for more Bank of Canada rate reductions
Canada’s economy expanded at an annualized rate of 1% in 2024’s third quarter, a modest pace of growth that likely means the Bank of Canada will continue lowering interest rates in the months ahead.
Data released by Statistics Canada on Friday showed that gross domestic product (GDP) rose at a slower clip than the central bank had expected in Q3, and slightly below estimates of economists surveyed by Bloomberg beforehand.
The Bank had expected GDP growth to come in at 1.5% for the quarter, while economists forecast a 1.1% increase. For the month of October, GDP inched upwards by 0.1%, maintaining the pace of growth from the previous month.
The figures suggest a still-sluggish economy as the prospect of further turbulence looms into view with the impending inauguration of Donald Trump as president south of the border. This week, the president-elect vowed to slap a 25% tariff on all Canadian goods entering the US unless Canada tightens border security and cracks down on the flow of illegal immigrants and drugs.
Odds of a half-point cut by the Bank of Canada jumped after the StatCan release, rising to more than 33% from a one in four chance beforehand, according to Bloomberg.
Non-residential business investment was down by 11.3% for the quarter, StatCan said, while household consumption increased by 3.5% and the household savings rate hit a three-year high of 7.1%.
The Bank of Canada is scheduled to make its final interest rate decision of the year on December 11, having trimmed rates in each of its last four announcements by a combined 1.25%.
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