As a new month begins, global economic conditions remain affected by persistent market instability and pervasive uncertainty. Inflation remains a key concern, while central banks remain committed to reversing the situation. One constant remains unchanged: Key interest rates remain high and show no sign of falling, with the shared goal of keeping inflation under control. In the following article, we summarize October’s key economic events.

Canada 

As October began, the Bank of Canada chose to maintain its rates, abstaining from any increase. The rate remains stable at 5%. Inflation persists, hovering at between 3.5% and 4% over the past three months. This trend makes any decision to raise the key interest rate increasingly complex. As Andrew Grantham, Managing Director and Senior Economist at CIBC, notes: “The data show that inflation has slowed. This circumstance, along with the poor economic growth we’ve been witnessing, should convince the Bank of Canada to maintain its key rate, not just for this month, but for the rest of this year, and even into early next year.”

A study conducted by National Bank in 2018 showed that the full effects of rate hikes were felt only after eight quarters. According to this study, 43% of the impact of rate hikes has yet to be felt in the consumer market.

United States

Jerome Powell, Chairman of the U.S. Federal Reserve (the Fed), insists on the need for caution in the months ahead. That’s the message we’re getting from his recent announcement that inflation rates in the United States remain too high. He asserted that the main objective was still to bring inflation down to 2%, and reassured the public that measures taken would be mild, the goal still being to avoid provoking a recession. The success of this approach has yet to be seen, and economists have differing views on the outcome.

Europe 

In the Eurozone, we see stagnation in household and business lending, a phenomenon common in periods of recession, according to National Bank. According to its forecasts, the European economy is set to contract as we near 2024. As noted last month, forecasts for the Eurozone remain unchanged.

Conclusion 

Finally, to conclude our October 2023 business news, global economic stability unquestionably remains a major challenge. Markets continue to falter, and uncertainty still looms large. We will continue to monitor developments and inform you of any changes. We’re currently reviewing our customers’ investor profiles and urging them to be slightly more cautious in their asset allocation by increasing the weighting of bonds in their portfolios. Please contact us to update your portfolio. If you have any questions about your financial situation, feel free to book an appointment with one of our advisors, who will be happy to help you.

  1. https://www.lapresse.ca/affaires/economie/2023-10-22/annonce-mercredi/la-banque-du-canada-ne-devrait-pas-modifier-son-taux-directeur.php 
  2. https://www.bnc.ca/a-propos-de-nous/nouvelles-medias/actualite-economique/analyses-economiques.html 
  3. https://www.ledevoir.com/economie/800361/etats-unis-inflation-reste-trop-elevee-etats-unis-martele-president-fed