Skip to main content

Featured

The Rate Cuts Are Over — Is a Hike Coming?

  July 23, 2026 Oil shocks, sticky inflation and a technical recession are pulling the Bank of Canada in opposite directions at once. For most of the past two years, the only question about the Bank of Canada was how far and how fast it would cut. The overnight rate fell from 5.00% to 2.25% between June 2024 and October 2025, one of the sharpest easing cycles in the Bank's history, and it has held there through six consecutive decisions since. That story is now over. The question on the table for the rest of 2026 isn't whether the Bank cuts again — it's whether the next move is actually a hike. Two conflicting signals, one Bank The case for staying put — or even cutting — comes from the growth side of the ledger. Statistics Canada data showed the economy contracted in both the fourth quarter of 2025 and the first quarter of 2026, meeting the informal definition of a technical recession. That was enough to have some economists warning the Bank had no room to raise rates at a...
Post a Comment
Read more

article

Labels

US Inflation Surges in January, Raising Concerns for Fed and Markets

 

The US consumer price index (CPI) rose 0.5% in January from the previous month, exceeding economists’ expectations of a 0.2% increase, according to data released on Tuesday. The annual inflation rate jumped to 3.1%, the highest level since March 2021, and above the Federal Reserve’s 2% target.

The surge in inflation was driven by higher costs of energy, food, shelter, and transportation, reflecting the impact of supply chain disruptions, labor shortages, and rising demand amid the economic recovery from the pandemic. Core inflation, which excludes volatile food and energy prices, also rose 0.4% in January, the largest monthly gain since July 2021.

The higher-than-expected inflation report rattled the financial markets, as investors feared that the Fed might have to tighten its monetary policy sooner than anticipated to prevent the economy from overheating. US stock futures fell after the release of the data, while the yield on the 10-year Treasury note rose to 2.09%, the highest level since January 2020.

The Fed has maintained that the current inflation spike is transitory and largely reflects the base effects of low prices a year ago, as well as the temporary factors related to the reopening of the economy. The central bank has signaled that it will keep its benchmark interest rate near zero and continue its bond-buying program until the labor market and inflation reach its goals.

However, some analysts and policymakers have warned that the inflation pressures could persist and become more widespread, posing a threat to the economic outlook and the Fed’s credibility. They have urged the Fed to act more aggressively to rein in inflation and prevent a loss of confidence in its ability to maintain price stability.

Labels:

Comments

Post a Comment