Morning Market Brief: December 18, 2023

Taking stock of Canadian inflation, GDP and more…

Last week, global central banks gave investors a glimpse of how monetary policy might be implemented in 2024 in Europe and the US. This week, a packed agenda of Canadian updates will be in focus, including inflation, retail sales and economic growth data, which should help the Bank of Canada (BoC) assess the state of the economy into the year-end.?

1. Statistics Canada (StatsCan) will announce the new home price index on Monday. In October, new home prices fell by 0.8% year-over-year, following a 1% decline in the previous month. Internationally, the Bank of Japan holds its policy meeting on Monday and Tuesday, which will be followed closely for any adjustments to normalize policy.
2. Canadian inflation data and changes in raw material prices will be released on Tuesday. Core inflation eased to 2.7% in October. That was the lowest rate since June 2021.
3. The BoC’s summary of deliberations from its December meeting is available on Wednesday. Key takeaways typically provide additional insights into the mindset and focus of the governing council. During October’s meeting, officials were split between arguing for more rate hikes or maintaining the current level.
4. Retail sales will be announced by StatsCan on Thursday. Sales rose by 0.6% in September and economists anticipate sales grew by 0.8% in October.
5. Canada’s gross domestic product (GDP) growth will be released by StatsCan on Friday. Economists expect minimal growth of 0.2% in October compared to September.

At the end of last week, BoC governor Tiff Macklem said that restrained spending and limited growth are some of the factors expected to keep inflation in check. Although Macklem mentioned that this weakness could open the door to rate cuts, he said it was still too early to consider them. Next year, the BoC intends to increase communications by holding more frequent news conferences with every interest-rate decision.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.?