The Bank of Canada has elected to hold its trendsetting overnight interest rate steady at 2.75% following its latest policy meeting.
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The move was widely expected amid signs that inflation is beginning to creep upwards in Canada. Twenty of 26 economists surveyed by the Reuters news agency said they expected the central bank to stand pat on interest rates at its June meeting.
Many of the economists who were polled mentioned April’s higher-than-expected core inflation rate as a fact that is likely to give the Bank of Canada pause. Market commentators are saying that the central bank’s job is getting more complicated as tariff uncertainty with the U.S. remains high and as the domestic economy in Canada slows.
News of the interest decision had leading Canadian stocks such as Royal Bank of Canada (TSE:RY), Canada Goose (GOOS) and Restaurant Brands International (TSE:QSR) trading flat on June 4.
Employment Decline
In recent weeks, there have been signs of deteriorating employment, with manufacturing jobs down 30,600 in April, a stagnant housing market, and signs that the Canadian economy has cooled. In such an environment, the prudent course of action is for the Bank of Canada to hold interest rates at current levels as it gathers more economic data and seeks greater clarity, say many pundits.
Additionally, Canada’s federal government is expected to unveil economic stimulus measures in the coming months that would give the economy a lift. Prior to its April decision, the Bank of Canada had issued seven consecutive interest rate cuts, starting in June 2024, that lowered its benchmark policy rate to its current level of 2.75%.
Is GOOS Stock a Buy?
The stock of Canada Goose has a consensus Moderate Sell rating among 10 Wall Street analysts. That rating is based on six Hold and four Sell recommendations issued in the last three months. The average GOOS price target of $10.81 implies 6.41% downside risk from current levels.
