The Bank of Canada is anticipated to keep interest rates steady, in response to a predicted decline in consumer spending over the forthcoming year. This decision is supported by data from Statistics Canada showing stagnant retail sales for September and a minor 0.1% decrease in August, aligning with economists’ forecasts.
In August, there was a decline in six out of nine retail sectors, including car dealerships, and electronics and furniture retailers. Retail sales, excluding autos, observed a slight 0.1% increase. However, in volume terms, August retail sales experienced a 0.7% drop.
The Bank of Canada’s consumer survey indicates that Canadian households are cutting back on goods purchases as they face mortgage payment renewals. It appears that individuals anticipating negative impacts from rate hikes are opting for discretionary items over loan-financed goods such as cars and appliances.
In September, Governor Tiff Macklem held borrowing costs at 5%, stating that higher rates are effectively slowing the economy and consumption. Policymakers are anticipated to maintain this position in the upcoming second consecutive meeting, relying on decreased demand leading to a slower rate of inflation.
In August, sales dropped in six provinces, with notable decreases in British Columbia and Vancouver due to a port strike affecting 12% of retailers, as reported by 36.5% of companies surveyed.
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