Bank of Canada leaves benchmark interest rate unchanged at 2.75%

In Canada, economic growth in the first quarter came in at 2.2 per cent, slightly stronger than the central bank had forecast, while the composition of gross domestic product (GDP) growth was largely as expected, the bank said in a statement.

“The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued,” it said.

The pull-forward of exports to the United States and inventory accumulation boosted activity, with final domestic demand roughly flat.

Strong spending on machinery and equipment held up growth in business investment by more than expected.

Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence, the central bank noted.

Housing activity was down, driven by a sharp contraction in resales. Government spending also declined. The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9 per cent.

Recent surveys indicate that Canadian households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs.

ALCHEMPro News Desk (DS)