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Canada hits inflation target
Investor uncertainty grows ahead of the Fed meeting, While Canada's inflation hits the central bank's 2% target
U.S. retail sales rose 0.1% in August, driven by online purchases
Canada’s inflation hit the bank’s 2% target in August
Investor sentiment remains mixed as markets brace for this week’s pivotal Federal Reserve meeting. August retail sales in the U.S. posted an unexpected rise, driven by online purchases, offsetting weaker results from other sectors. According to data from the Commerce Department released Tuesday, retail sales, unadjusted for inflation, climbed 0.1%, following a revised 1.1% gain in July. Excluding autos and gasoline, sales increased for the fourth consecutive month.
The figures underscore steady consumer demand in the middle of the third quarter, even as hiring and wage growth begin to moderate. For Federal Reserve policymakers, these data highlight the resilience of the U.S. economy as they prepare to decide on the future path of interest rates at Wednesday’s meeting.
Canadian inflation eases to BoC’s 2% target
Canada's annual inflation rate slowed for the third straight month in August 2024, reaching 2%, its lowest level since February 2021 and slightly below market expectations of 2.1%. This marks the first time in over three years that inflation has hit the Bank of Canada’s target.
Excluding gasoline, the Consumer Price Index (CPI) rose 2.2% in August, down from 2.5% in July. Core inflation measures, closely monitored by the central bank, also eased to their lowest levels in 40 months. On a monthly basis, the CPI decreased by 0.2% in August, contrary to predictions of a flat reading, following a 0.4% rise in July, according to data from Statistics Canada.
ECB’s Kazaks: Rate cuts not over, could hit 2.5% by mid-2025
European Central Bank Governing Council member Martins Kazaks suggested that the ECB is not finished with its rate cuts, even after two reductions this year. Kazaks remarked that borrowing costs remain "quite restrictive" and that further rate decreases are anticipated. "These rates will continue to go down," he noted.
The pace of future cuts, Kazaks explained, will depend largely on the trajectory of inflation in the services sector and the broader outlook for the struggling European economy. “If we consider market expectations — and I see no strong reason to dispute them — interest rates could reach 2.5% by mid-2025,” Kazaks added.
