Analyst: Economic Data Insufficient to Force Bank of Canada to Cut Rates

Manulife Investment Management analyst Dominique Lapointe believes that Canada's 2.2% GDP growth in the first quarter does not indicate positive developments in the new tariff era, nor is it sufficient to force the Bank of Canada to cut interest rates on June 4. Therefore, he expects the central bank to adopt a "dovish hold" policy but believes that if signs of economic weakness persist, the central bank will cut rates in July, October, and December. Lapointe points out that although the first-quarter GDP growth exceeded expectations, it was mainly supported by exports and inventory accumulation driven by pre-tariff effects, with domestic demand still appearing fragile. He emphasizes the need to continuously monitor second-quarter data to see if it reflects further deterioration in domestic demand. If consumption and investment do not improve, coupled with trade policy uncertainty, the central bank may have to stimulate the economy through multiple rate cuts.