Correspondingly, the Bank Rate is now set at 5%, and the deposit rate is 4¾%. This decision aligns with the Bank’s ongoing balance sheet normalization policy.
Global Economic Context
The global economy grew by approximately 3% in Q1 2024, matching the Bank’s April Monetary Policy Report (MPR) projection. The U.S. economy experienced slower-than-expected growth due to weakened exports and inventories, despite strong but easing private domestic demand. The euro area saw a pickup in activity, while China’s economy strengthened on the back of exports and industrial production, although domestic demand remained weak. Inflation in advanced economies is generally easing, though progress is inconsistent across regions. Oil prices and financial conditions have remained stable since April.
Economic Conditions in Canada
Canada’s economic growth resumed in Q1 2024 after stagnation in the latter half of 2023. The GDP grew by 1.7%, slightly below the MPR forecast, due to weak inventory investment. Consumption grew solidly at around 3%, and business investment and housing activity saw increases. The labor market shows continued hiring, although employment growth is lagging behind the working-age population increase. Wage pressures are gradually moderating. Overall, recent data indicates the economy is operating with excess supply.
Inflation Trends
CPI inflation further declined to 2.7% in April. Core inflation measures also slowed, with three-month trends suggesting ongoing downward momentum. The breadth of price increases across CPI components has reduced and is nearing historical averages, though shelter price inflation remains high.
Monetary Policy Decision
With evidence that underlying inflation is easing, the Governing Council decided to reduce the policy interest rate by 25 basis points. Recent data reinforces confidence that inflation will continue to approach the 2% target. However, risks to the inflation outlook persist. The Governing Council will closely monitor core inflation trends, demand-supply balances, inflation expectations, wage growth, and corporate pricing behavior to ensure price stability for Canadians.
Source: Canva
Next Steps
The Bank of Canada will announce its next overnight rate target on July 24, 2024, and release a comprehensive economic and inflation outlook, including risk assessments, in the MPR on the same date.
On May 24th, 2024, the Government of British Columbia confirmed that the SkyTrain Millennium Line’s Broadway Extension to Arbutus in Vancouver will open in Fall 2027, delayed from the original early 2026 target.
The replacement Pattullo Bridge between New Westminster and Surrey is also delayed, now set to open in Fall 2025 instead of the end of 2024.
Construction on the SkyTrain extension began in the Spring of 2021, with initial expectations to be completed by late 2025. Delays began with a strike by local concrete plant workers, pushing tunnel boring from Summer 2022 to Fall 2022. This shifted the opening from late 2025 to early 2026. A recent milestone in April 2024 saw the completion of the 5 km twin tunnel boring between Great Northern Way-Emily Carr and Arbutus stations.
The new timeline means the Broadway Subway will open in Fall 2027, followed by the SkyTrain Expo Line’s Surrey-Langley Extension in late 2028.
Broadway Subway executive project director Lisa Gow explained that delays in tunnel boring added roughly half a year to the timeline. Crews are now removing tunnel boring machine components and dismantling supporting equipment. Construction on other major components, like underground station structures and railways, could not progress until tunnel boring finished.
Tunnel boring machine Elsie breaks through at the future South Granville Station (February 2024)ю (Government of BC)
Tunnel boring delays, particularly near Broadway-City Hall Station, were partly due to the complex excavation process. Moving machines required completed excavation and solid concrete foundations for sliding the equipment. Additional time was needed to tunnel under the Canada Line tunnel, utilities, and a trunk sewer under Cambie Street. The Broadway Subway’s tunnel depth at Broadway-City Hall Station is over 20 meters, the deepest in the project.
Deck installation on Broadway for maintaining vehicle traffic also added between four and nine months to the construction timeline. Particularly long delays occurred at Arbutus Station due to its proximity to residential buildings and its role as a major crossover track. The process for dismantling these decks, which could begin as early as late 2025, is expected to take as long as their installation.
Broadway Subway: A crane lifts a Tunnel Boring Machine part out of the excavated Arbutus Station site (April 2024). (Government of BC) Broadway Subway: Crews at Great Northern Way-Emily Carr construct the station roof and concourse-level floor (April 2024). (Government of BC)
Despite delays, progress on the 0.7 km elevated segment between VCC-Clark Station and the tunnel portal is on track, with the concrete structure complete and track laying preparations underway. The pandemic also impacted the project early on, slowing resource organization and early works.
Gow is confident in the new Fall 2027 timeline, with dynamic testing of trains starting in 2026 and continuing through 2027. However, cost pressures are a concern for both the contractor, a consortium led by Acciona and Ghella, and the provincial government. Acciona is also responsible for the delayed Pattullo Bridge. The contractor’s budget is $1.73 billion of the total $2.83 billion project cost, with the remaining $1.1 billion funded by provincial and municipal governments and TransLink.
The Broadway Subway project will extend the Millennium Line by 5.7 km. Travel from Arbutus Station to Commercial-Broadway Station will take about 12 minutes, and to Lafarge Lake-Douglas Station about 47 minutes, with trains running every three to four minutes during peak hours.
Upon opening, the 99 B-Line will run a shortened route between Arbutus Station and the University of British Columbia until the future westward extension to UBC is completed, possibly in the 2030s. The extension will also make Broadway-City Hall Station a major regional interchange hub between Canada and Millennium Lines.
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