The announcement from down south that the United States did not change its interest rate, for the third straight time, is at least encouraging news for its neighbours to the north. While rates in the two countries are not linked, they generally follow the same trends.
On top of that, America’s Federal Reserve has “set the table” for multiple cuts in 2024. The current rate — between 5.25 and 5.5 per cent — is expected to be followed by at least three cuts next year, a more aggressive stance than what was expected. Each cut is expected to be 0.25 per cent.
The Federal Reserve found that inflation was easing and the economy was stabilizing, following a cycle of 11 consecutive increases that pushed the rate to its highest level in more than 22 years. The increases began in March 2022, At the time, the interest rate was 0.13 per cent.
If all of that sounds like a familiar trend for Canadians, that’s because it should. In Canada, there was a cycle of 10 increases that raised the rate to its highest level in two decades, the increases began in March 2022, when the interest rate was 0.25 per cent.
Canadians financial experts have speculated the interest rate will be cut throughout 2024, but the Bank of Canada has not endorsed that analysis.
Yet.
When the interest-rate news broke, the Dow Jones jumped by 512 points. In Canada, the TSX went up by 395 points.
Coincidence?