Bank of Canada rate cut gives indebted Canadians reason to hope, poll finds
More debt-burdened Canadians think better days could be just around the corner after an interest rate cut and promising data boosted their outlook for the economy, a long-running survey of consumers suggests.
Maru Public Opinion’s Household Outlook Index (MHOI) found that a rising number of people believe the Canadian economy will improve over the next two months, jumping seven percentage points to 44 per cent from June to July. Thirty eight per cent said they think the economy is heading in the right direction, an increase of five percentage points from June.
While a majority remain concerned about the economy, recent developments — including a second consecutive Bank of Canada rate cut — have changed the channel for many people, Maru said in a press release.
Other data that likely lifted people’s outlook in July included slowing inflation and stronger-than-expected gross domestic product (GDP). The former decelerated to 2.7 per cent year over year in June, from 2.9 per cent in May 2023. GDP for May rose 0.2 per cent from April, beating analysts’ estimates.
“Aside from the dollar and cents impact (the rate cut) has, it’s a tangible signal to consumers that things are on the right track for better days ahead,” John Wright, executive vice-president at Maru Public Opinion, said in the press release.
The Bank of Canada announced its second straight 25 basis point rate cut on July 24, just days before Maru conducted its monthly survey, from July 26 to 29.
“There’s no denying that this was welcome news for those who are managing mortgage renewals and variable mortgage rates,” Wright said.
Many economists have warned of a “mortgage cliff,” with just over half of homeowners who took out a mortgage before the Bank of Canada
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