Interest rates can take as long as 18 months to work through the economy, experts say, so a slowdown in consumer spending is right on track. Inflation edging down, coupled with an expected loss of stream in the housing market, makes a strong case that the BoC’s aggressive hike cycle is doing what it’s meant to. TD’s report comes on the heels of Statistic Canada’s latest inflation measure, released Tuesday morning, which showed that the Consumer Price Index has slowed to 3.4%, putting it at its lowest level in almost two years. The quarter-on-quarter cool-off will also be pronounced at a provincial level in Ontario and BC, says the report, as those markets “move towards more ‘normal’ sales levels after they cratered last year.” This owes to “heightened sensitivity to the higher rate backdrop.” “Like sales, we’ve marked down our quarterly growth profile next year.” “Furthermore, we anticipate purchases growing at a slower quarter-on-quarter pace than previously envisioned in 2024,” writes TD Economist Rishi Sondhi in Tuesday’s report.ĭespite some support from tight supply-demand conditions, which should keep average price growth positive in the third quarter, a fourth-quarter slide is expected for prices as well, continues Sondhi. With just a few days left in the second quarter of the year, a new report from TD Economics looks ahead to the anticipated trajectory of the Canadian housing market, saying that “headwinds” brought on by the Bank of Canada’s (BoC) continued hike cycle will cause sales activity to dip in the second half of the year.
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