Market Watch

On January 29, the Bank of Canada (BoC) continued to cut interest rates, lowering its key policy rate (i.e., its target for the overnight rate) by 25 basis points to 3.00%. The BoC cited a relatively weak labour market, easing wage pressures and reduced business investment as some of the main reasons for cutting rates. The next BoC interest rate announcement is scheduled for March 12, 2025.

Based on the Consumer Price Index (CPI), year-over-year inflation in Canada rose by 1.8% in December, which was a slight decrease from the gain of 1.9% in November. Lower costs for restaurant food purchases and alcoholic beverages, given the temporary HST/GST break, contributed most to the deceleration. On a monthly basis, the CPI declined 0.4% from November’s reading.¹

Regarding the labour market, employment in Canada increased by 91,000 jobs in December (a month-over-month rise of 0.4%), while the unemployment rate was 6.7%, down 0.1 percentage points. Strong gains were made in educational services and also in transportation and warehousing. Provincially, Alberta added the most jobs for the month, while Manitoba was the only province to post declining employment in December.²

On a month-over-month basis – using a standalone, seasonally adjusted annualized rate – housing starts in Canada were basically flat (-0.7%) in December relative to November, with 242,637 units.³ In December, home sales within Canada declined by 5.8% month-over-month, but remained roughly 13% higher than in May, which was shortly before the BoC began lowering interest rates. Month-over-month, the number of newly listed properties dropped by 1.7% in December.⁴

In the Spotlight – How healthy are your Finances?

Many people wait until the new year before improving some facet of their life. While there’s no real reason to do this – aside from having a nice clean starting point – if that motivates you now to conduct a “health check” on your finances, then go for it! Getting a sense of your financial circumstances raises awareness of your strengths and weaknesses, which can guide your actions to improve your finances.

Quick Fact

Credit card debt tends to spike during the holiday season. For example, in December 2024, Canadians added more than $800 million in credit card debt. Good financial health means keeping debt under control – all year long!

Fact vs Fiction

Here are three common misconceptions about financial planning.

1. Financial planning is for the wealthy.
As long as you have financial goals and challenges, you could benefit from a plan. It doesn’t have to be elaborate, but a financial plan empowers you with direction and discipline to help meet your objectives.

2. I don’t need a budget.
Within a financial plan, a budget provides a real-time snapshot of your income sources and expenses. If you have debt concerns, consider ways to reduce spending and/or increase income. Without a budget, you’re only guessing about your finances.

3. Having money issues can impact mental health.
This is true! Challenges with money often cause anxiety, especially if you feel helpless about your situation and don’t know where to turn. An Alterna Advisor can work with you on your finances, helping to reduce your stress.