July rate cut 'more likely' than June: TD's chief economist
BNN Bloomberg
TD Bank’s chief economist says the Bank of Canada is likely to wait until July before cutting interest rates, despite many other economists calling for a cut at the bank’s next meeting in June.
“Markets are split on whether the Bank of Canada will cut interest rates in June. We think more likely July for the simple fact that it gives them a bit more time to observe what's happening on the inflation side,” Beata Caranci told BNN Bloomberg in a Tuesday interview.
“I say that because we had three good months in the U.S. where everybody was really optimistic that inflation was coming down swiftly and the U.S. Federal Reserve would be in a position to cut as early as the summer… those are now gone.”
Caranci said she thinks Canada’s central bank will continue to be cautious about moving too early on cuts in case inflation proves stickier than expected, adding that they can afford to stay on the sidelines for now.
Manufacturing sales fell 2.1 per cent to $69.9 billion in March as sales of petroleum and coal products and motor vehicles fell, Statistics Canada said Wednesday. Olivia Cross, North America economist at Capital Economics, said the result was not as bad as the early estimate that pointed to a drop of 2.8 per cent, but it still means sales fell 0.9 per cent over the first quarter. "The weakness of manufacturing sales in March suggests that the economy lost momentum heading into the second quarter, matching the message from the earlier preliminary estimates for retail sales and GDP," Cross said in a note. Last month, Statistics Canada released a pair of preliminary estimates for real gross domestic product and retail sales for March that both suggested the data points were essentially unchanged for the month. Driving the manufacturing sales numbers for March was an 8.0 per cent drop in sales of petroleum and coal products to $8.0 billion as volumes fell 6.1 per cent. Sales of motor vehicles fell 7.9 per cent to $4.6 billion in March as sales of motor vehicle parts lost 2.8 per cent. Statistics Canada says retoolings at several major auto assembly plants in Ontario continued to impact auto manufacturing and contributed to the lower sales for the month. Meanwhile, sales of machinery rose 2.9 per cent to $4.5 billion in March. The increase came as sales in all seven machinery industry groups climbed higher, led by commercial and service industry machinery which gained 41.6 per cent. Overall manufacturing sales in constant dollars fell 2.0 per cent in March. Total inventories for the month were largely unchanged at $121.0 billion in March, while unfilled orders fell 0.8 per cent to $104.8 billion. This report by The Canadian Press was first published May 15, 2024.