The Canadian economy lost momentum with 0.2% GDP growth in February, following a 0.5% gain in January. Year-over-year growth was 0.8%, below the anticipated 1.1%. Economists believe these numbers put more pressure on the Bank of Canada to cut interest rate soon. Despite March showing minimal GDP change, Q1 saw a 2.5% annualized growth. Services industries grew by 0.2%, particularly transportation and warehousing, while goods-producing sectors remained stagnant, except for mining and oil and gas extraction which grew 2.5%. Air transportation saw a 4.8% increase due to growing international travel. However, sluggishness persists due to high interest rates impacting spending decisions.

Governor Tiff Macklem hinted at rate cuts if inflation continues to cool towards the bank’s 2% target. Many economist have suggested a June rate cut, considering weakening momentum in the economy. The labor market also reflects this, with unemployment at 6.1% in March. A potential rate cut hinges on April inflation data.