Below, you will find our monthly market update and relative information that pertains to the current state of the economy.

Market Update

• All of the market indices closed higher than the beginning of the month.
  • • The S&P 500 finished at 5,881.63 pts (+2.70%)
    • The DOW finished at 44,544.22 pts (+4.70%)
    • The NASDAQ finished at 19,627.44 pts (+1.64%)
    • The TSX finished at 25,533.10 pts (+3.26%)

Canada

Monetary Policy

• On January 29^th, The Bank of Canada (“BoC”) decided to lower the overnight lending rate by 25bps.
  • Currently, the overnight rate is 3.00%, the Bank Rate is at 3.25%, and the deposit rate is at 2.95%.
    • Effective January 30^th, the deposit rate will be set at 5 basis points below the Bank’s policy interest rate to improve the effectiveness of monetary policy implementation.
  • This marked the BoC’s sixth straight rate cut with inflation coming down and economic growth stalling.
  • The next interest rate announcement will take place on March 12^th, 2025.

Economic Data

• Canada’s inflation rate slowed to 1.8% in December from 1.9% in the previous month. Economists were expecting inflation to hold steady at 1.9%.
• The core inflation rate, which excludes more volatile items (food and fuel), was down slightly at 2.5% (down from 2.6% in November).
• Sales of existing homes in Canada fell by 5.8% in December, marking their first monthly decline since August.
  • Still, sales were up 19.2% year-over-year, suggesting that real estate market activity is picking up amid lower mortgage rates.

U.S.

Monetary Policy

• The Fed announced that there was no change to its federal rate in its January meeting.
  • The target range for the federal funds rate is 4.25-4.50%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.
• The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• The next FED meeting of 2025 will take place on March 18^th-19^th.

Economic Data

• The annual inflation rate in the U.S. moved higher to 2.9% in December from 2.7% in the previous month, matching expectations.
  • This was the fastest pace of inflation in the U.S. since July, as energy prices declined at a slower pace. Price growth for food and transportation picked up in December.
• The U.S. economy added 256,000 jobs in December, well above the 165,000 economists had expected. This marked the highest number of job additions since March.
• The U.S. unemployment rate dropped to 4.1% in December from 4.2% in the previous month.

Global

• At its first meeting of 2025, the European Central Bank (“ECB”) reduced its policy interest rates by 25 bps.
  • The ECB noted that inflation is coming down but remains a bit high given elevated wage growth.
• China’s economy expanded by 5.4% in the fourth quarter of 2024, which topped the 5.0% increase markets had expected.
  • This was the fastest pace of growth since the second quarter of 2023, benefiting from government stimulus measures meant to increase economic activity.
• The Bank of Japan (“BoJ”) raised its policy interest rates by 25 basis points to 0.50%, its highest level since 2008.
  • Elevated inflation and increased wages contributed to the BoJ’s third rate hike over the past year.

Notes From our Firm

• The deadline to contribute to an RRSP for the 2024 tax year is March 3, 2025.
• In light of the ongoing tariff headlines, here is a great article from one of our fund partners giving great insight into the matter (CLICK HERE).
• While the talks of tariffs are slowly starting to materialize, our team is actively taking part in calls, webinars, and meetings with our fund partners to ensure we see clients through this time regardless of them being implemented or not.

As always if you have any questions, please feel free to reach out to us. Or, if you know someone who would like an opinion on their investments or insurance, please connect us! There is no better compliment than a referral from one of our current clients.

The Team, C.R. Smith Financial

Community, Respect, Service & Financial Integrity