Global equity markets advanced over the month after the U.S. Federal Reserve and other central banks signaled their intentions to begin lowering interest rates this year. Inflationary pressures in Canada continued easing, reaching their lowest level since June 2023, which surprised economists who were expecting the inflation rate to increase to 3.1%. Canada’s inflation rate fell to 2.8% from 2.9% the previous month. Dragging down the overall inflation rate was a sharp drop in cellular and internet services. Consumer demand in Canada fell, with retail sales posting the first decline in five months. All of which supports our view that the Bank of Canada will begin introducing rate cuts soon, with the first rate cut most likely coming in June.

South of the border, the Fed held their interest rate at the current level for the fifth meeting in a row. In their commentary, they noted that they will need to see more evidence of inflationary pressures easing before reducing interest rates. The Fed projects the US economy to expand by 2.1% this year.

The S&P/TSX Composite Index is up 4.55% on the year while the S&P 500 (US) is up 9.48% year to date.