Bank of Canada anticipates 2.25 percent economic expansion throughout next 2 years
(MENAFN) The bank of Canada anticipates approximately 2.25 percent economic growth over the next two years, as detailed in its Summary of Governing Council deliberations released on Wednesday regarding its policy decision from July 24.
" After weakness in the second half of 2023, GDP growth resumed in the first quarter of 2024. Recent data suggested positive but subdued GDP growth in the second quarter, largely driven by population growth," the summary stated.
It further mentioned, " GDP growth was expected to pick up in the second half of the year and continue expanding by around 2¼ percent over the next two years. This forecast is largely driven by renewed strength in residential investment and consumption, as well as a boost in exports."
On July 24, the Bank of Canada announced a reduction in its policy rate by 25 basis points to 4.5 percent, marking the second rate cut in over four years.
The central bank noted that the unemployment rate had gradually increased to 6.4 percent in June amid a slowing economy, while wage growth remained elevated at around 4 percent, significantly outpacing productivity growth.
Governing Council members observed that the consumer price index (CPI) inflation had been within the 1 percent - 3 percent range since January, reaching 2.7 percent in June.
"Shelter prices remained the largest contributor to overall inflation. Strong demand for housing and limited supply would continue to put upward pressure on rent," the summary added.
The bank also commented on the US economy, noting that it had begun to slow in the first half of the year, largely due to the expected moderation in consumer spending, and mentioned that a cooling labor market might further reduce consumption.
"In Europe, growth had come in a bit stronger following a weak 2023. Tourism was providing a boost to activity. Labor costs remained high and may have been contributing to services price inflation in the euro area," the summary concluded.
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