The Bank of Canada lowered its overnight lending rate this morning by 25 basis points from 4.5 per cent to 4.25 per cent. In the statement accompanying the decision, the Bank noted that growth in the Canadian economy was slightly stronger than expected in the second quarter but showed signs of softer activity through the summer.  Inflation is evolving largely as expected, and the Bank judges the economy to be in excess supply which should put further downward pressure on price growth.

Focus has shifted from whether the Bank of Canada will lower rates, to how quickly, with some analysts even looking for larger 50bps cuts in the future. The trends to watch over coming months are the state of the Canadian labour market and whether inflation is following the Bank of Canada's forecast. As long as price growth isn't deviating from expectations, and employment is not significantly weaker, we should see continued rate cuts at an orderly 25bps pace until the Bank reaches its neutral range between 2.25 and 3.25 per cent in 2025. 

For more information, please contact: Gino Pezzani.

Canadian housing starts rose 16 per cent to 279,509 units in July at a seasonally adjusted annual rate (SAAR). Starts were up 10.4 per cent from the same month last year. Single-detached housing starts were 2 per cent higher from last month at 54,189 units, while multi-family and others rose 20 per cent to 225,321 units (SAAR). 

In British Columbia, starts rose 18 per cent from last month to 47,987 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 9 per cent to 4,376 units while multi-family starts rose 21 per cent to 41,414 units. Starts in the province were 1 per cent below the levels from July 2023. Compared with last year, year-to-date starts are up by 69 per cent in Kelowna, and 29 per cent in Abbotsford. Year-to-date starts are down by 18 per cent in Vancouver, 8 per cent in Nanaimo, and by 0.6 per cent in Victoria. 

Link: https://mailchi.mp/bcrea/canadian-housing-starts-july-2024

For more information, please contact: Gino Pezzani.