Summary

In early September, the Bank of Canada lowered its benchmark interest rate by 25 basis points to 4.25%, the third consecutive drop since June. The central bank noted overall weakness in the economy and progress on inflation. Canadian unemployment rose to 6.6% in August from 6.4% the month before, with population growth outpacing jobs growth. Meanwhile, GDP growth averaged only about 2% in the first and second quarters of 2024, and the Canadian economy added a modest 22,000 jobs in August, down from a much higher 90,000 in April. Consumer price inflation eased to 2.5% in July, closer to the central bank’s 2% target. Similar to the U.S., shelter inflation in Canada remains elevated, though lower interest rates have started to help as mortgages renew at better levels and rent increases ease. The governor of the Bank of Canada remarked as follows: “With inflation getting closer to the target, we need to increasingly guard against