Monthly Market Updates
On December 7, the Bank of Canada raised its benchmark overnight interest rate by 50 basis points (bps) for the seventh time this cycle. Despite some analysts suggesting we could see a pause in hikes, Governor Tiff Macklem indicated in his year-end speech that the central bank is likely to keep raising rates in 2023. Macklem’s stance was not surprising amid reports from Statistics Canada that inflation continued to pressure Canadians in November. Grocery bills increased by 11.4% annually, up from 11% in October, while gasoline prices fell modestly by 3.6%. Canada’s housing market was also under strain as mortgage rates hit multi-year highs.
Central banks around the world also raised rates. The U.S., the U.K. and the European Union all saw 50 bps rate increases during December. Business activity contracted further in the U.S., according to the S&P Global U.S. Composite Purchasing Managers Index, and signs are generally pointing to a slowdown in economic activity. China’s economy was also under immense pressure from persistent lockdowns and moderating global demand, and abandoned its “zero-COVID” policy early in the month.