Canada's Economy Contracts in November Despite Central Bank Rate Cuts

The Canadian economy experienced its first contraction of the year in November, despite the central bank implementing sharp interest rate cuts.

Statistics Canada reported on Monday that preliminary data indicated GDP fell by 0.1 percent in November, following a 0.3 percent growth in October.

If the November forecast holds in the final figure and December GDP growth remains stable, the fourth-quarter GDP will fall short of the Bank of Canada's 2 percent growth forecast.

It is worth noting that the central bank has reduced interest rates by 175 basis points since June, including two major cuts of 50 basis points each in recent months to stimulate economic activity.

The bank will announce its next interest rate decision on January 29, ahead of Statistics Canada's next GDP report. Money markets are anticipating a further 25 basis point cut, with around a 50% probability.