Canada’s new $6 billion stimulus package, featuring a GST holiday and $250 cheques for workers earning under $150,000, is making the Bank of Canada reconsider rapid rate cuts. The GST suspension, spanning December 14 to February 15, and spring stimulus cheques could reignite inflation, already higher than expected last month.
Economists forecast a modest 25-basis point cut in December, though RBC anticipates 50 points. Rising bond yields show investor caution, and the BoC is also watching U.S. Federal Reserve signals of slower cuts. Stimulus-driven demand may delay further rate reductions.
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