“I would say if (the Bank of Canada) doesn't cut next week, it will show a very strong willingness to put the economy into recession, just to get inflation down a few more percentage points.”
Statistics Canada's latest report on retail sales on Friday showed Canadians spent again in May as retail sales fell 0.8% to $66.1 billion.
Sales fell in eight of the nine quarters followed, the agency said.
“All the Bank of Canada is trying to do is reduce the amount of restraint it puts on the economy. It's not trying to boost the economy, it's just trying to reduce the level of headwinds,” Mendes said, adding that a second rate cut could make Canadian consumers start to feel confident about spending money again.
Why Canada's employment numbers matter
The most recent data on the Canadian labor market shows the economy weakened in June, losing 1,400 jobs while the unemployment rate rose to 6.4%, up from 6.2% in May.
The June result was the highest reading for the unemployment rate since January 2022, another indicator that raises the possibility of a rate cut by the Bank of Canada this week.
But while most market watchers believe interest rate cuts will come this week and be followed by more cuts later in the year, that view is not unanimous.
Clay Jarvis, real estate expert at NerdWallet Canada, said this week's decision could go either way.
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