Canada's Economy Lags Behind Expectations, Sparking Interest Rate Speculation

Canada's economy grew by an annual rate of only 1% in the third quarter, below the Bank of Canada's expectations. Consumer spending and government expenditure contributed to growth, but business investment remained weak. Markets are now betting on a significant rate cut in response.

Canada's economic growth slowed to an annualized rate of 1% in the third quarter, falling short of the Bank of Canada's projections. This disappointing growth has led currency markets to increase expectations for a larger rate cut next month.

Consumer spending and government expenditure were bright spots, offsetting declines in business investment. However, the standard of living, measured as GDP per person, contracted for the sixth consecutive quarter.

With inflation rates hitting targets and growth remaining sluggish, analysts argue there is no compelling reason for the Bank of Canada to alter its current approach. Market speculation now leans towards a substantial 50-basis-point interest rate cut at the upcoming December meeting.

(With inputs from agencies.)