The headlines in Canada were dominated last week by fresh trade tensions between Canada and the US. Canada’s retaliatory tariffs went into effect on September 8, which were immediately followed by US President Donald Trump announcing a ban on certain Canadian imports and new tariffs, which are to take effect later in September. The opening could give the two sides the ability to reach a deal before the new measures are imposed. Looking at the week ahead, markets will be glued to trade developments, Canadian inflation and the US Federal Reserve Board’s (Fed) interest rate decision.

• Canada’s inflation rate for August will be released today. In July, Canada’s annual inflation rate accelerated to 3.0%, largely in response to higher energy prices amid the ongoing conflict in the Middle East. Core inflation remains close to the Bank of Canada’s 2% target.
• The Canadian Real Estate Association will announce Canada’s existing home sales on Tuesday. Home sales increased by 0.5% in July.
• South of the border, the Fed will announce its interest rate decision on Wednesday. The Fed held its federal funds rate steady at its last meeting, but expectations have grown the Fed will need to lift interest rates this year in response to elevated inflation.
• Elsewhere, China’s retail sales will be announced tonight, European balance of trade on Tuesday, the UK inflation rate on Wednesday and Europe’s inflation rate and Bank of England interest rate decision on Thursday.

Canada’s inflation rate will be closely monitored to see how geopolitical tensions in the Mideast are impacting prices. New tariffs could put further upward pressure on prices in the months to come. Canada could face a challenging environment of high prices and muted economic activity. But those challenges have persisted for some time now, and Canada’s economy has demonstrated its resiliency and relative strength.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.