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Why Interest Rates Matter for Canadians

Interest rates are the single most powerful lever in Canada's economy.  When the Bank of Canada adjusts its policy rate, the effects reach every household—from the cost of carrying a mortgage to the return on a savings account. With rates currently at 2.25% and significant uncertainty ahead, understanding how rates work has never been more important for your finances. What Is the Bank of Canada's Policy Rate? The Bank of Canada sets the overnight policy rate—the interest rate at which major banks lend money to each other. This rate serves as a benchmark that influences borrowing and lending costs across the entire economy. When the Bank raises or lowers this rate, commercial banks adjust their prime rates accordingly, which directly affects the rates you pay on mortgages, lines of credit, and other loans. The Bank's primary goal is to keep inflation near its 2% target. When inflation runs too hot, the Bank raises rates to cool spending. When the economy slows, it cuts rates...
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US Futures Rise as Inflation Cools Unexpectedly

                                            

US stock futures are on the rise today after a key report on consumer inflation surprised investors. The Consumer Price Index (CPI) declined 0.1% over the previous month, marking the first month-over-month decrease since 2020. Additionally, the annual gain in consumer prices was the slowest rise since early 2021, coming in at just 3.0% over the prior year in June.

Here are the highlights:

  • S&P 500 Futures: The broad index crossed 5,600 for the first time on Wednesday, and futures rose by 0.2% today.
  • Dow Jones Industrial Average Futures: These rose roughly 0.1%.
  • Nasdaq 100 Futures: Contracts on the tech-heavy Nasdaq 100 also gained around 0.2%.

Fed Chair Jerome Powell’s recent comments have fueled expectations of interest-rate cuts, and today’s inflation data further bolstered bets on a cut by September. Approximately 87% of traders now expect such an outcome, according to the CME FedWatch tool.

In corporate news, Costco shares rose in pre-market trading after announcing its first membership fee hike since 2017. This move is seen as reflecting price pressures on consumers. Meanwhile, PepsiCo and Delta Air Lines reported earnings, setting the stage for big bank earnings in the second quarter.

Stay tuned for more updates as the market continues to react to economic data and corporate earnings.


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