Canada achieves soft landing – IMF

The International Monetary Fund (IMF) has assessed Canada’s economic performance as a soft landing, where inflation is controlled without triggering a recession, according to its report.

Canada’s GDP grew modestly in 2024. Inflation, at 2.7 per cent, remains within the Bank of Canada’s target range of one per cent to three per cent, exceeding expectations and supporting the case for a rate cut.

The IMF revised its 2024 and 2025 GDP growth forecasts for Canada upwards to 1.3 per cent and 2.4 per cent, respectively. Inflation is projected to settle around 2.5 per cent this year and reach two percent by 2025.

In a separate report, the IMF predicts modest global growth over the next two years, with the US experiencing cooling activity, Europe potentially reaching a low point, and China witnessing stronger consumption and exports.

Financial markets are highly confident that the Bank of Canada will cut rates on July 24th, with 92 per cent of bets predicting a reduction. This would be the second rate cut in four years, following last month’s decrease from 4.75 per cent to 4.5 per cent.

Attribution: Reuters