"Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected"
- BoC Governor Stephen Poloz
Canada wholesale sales, which is a leading indicator of consumer spending, dropped unexpectedly in June, falling from a record high a month earlier, led by farming and building supplies, data from Statistics Canada showed. Sales plunged 2.8% to 48.8 billion, compared with a 2.2% gain in the preceding month, and below analysts' expectations, who predicted a 0.5% drop. That was the fastest pace of decline since January 2009. In addition to that, the volume of wholesale sales fell 2.9% over the same period. The main drag on indicator was sales of agricultural supplies, where sales turned lower 22.6% in June, after a 19.6% advance recorded in May. Additionally, sales in the building material and supplies subsector registered the second largest drop in June, falling 3.0%.
Canada's economic growth is expected to stay choppy in the next few months, with the expansions slowing to a 1% in the second quarter, before accelerating to 3.8% in the July-to-September period. The output has been mostly disrupted by flooding in Alberta and a construction strike in Quebec. During the last policy meeting the Bank of Canada Governor Stephen Poloz held the benchmark interest unchanged at 1% and signalled that consumers and homebuyers should not worry about borrowing costs, which are likely to stay low for the foreseeable future.
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