The Bank of Canada (BoC) announced this week they held the key interest rate at 2.75%, marking its first pause after seven consecutive cuts. The good news is this isn’t an indication that the bank's decision is an end to the easing cycle, but rather a way to ensure inflation remains under control while stating it would jump in to support the economy as needed.
South of the border, the US Federal Reserve is in a much trickier situation as it attempts to navigate a stronger-than-anticipated job market and sticky inflation. Add in the higher-than-anticipated tariffs, and the US Federal Reserve is waiting for greater clarity on the impact of the policy changes in areas such as immigration, taxation, regulation, and tariffs before considering further rate cuts.
In the meantime, the cost of doing business will no doubt trickle down to us, the consumers, making things more expensive.
A case in point is the price of chocolate. Most consumers who have purchased goodies for the family this weekend have likely noticed a rise in prices. Cocoa hit an all-time high in 2024 as a result of a strained supply chain. Add in the additional tariffs that were announced in the last few weeks, and today’s prices could be a bargain by this time next year.
Only time will tell how the US administration’s policies will play out. The positive outlook for Canadians is that there will likely be further monetary easing to support the economy, which is generally good for the markets.