May 2023 Market Update from Canada Life Investment Management

Inflation ticks higher in Canada

Rising mortgage and transportation costs are driving Canada’s inflation rate higher. Inflation reached 4.4% in April, missing the 4.1% figure economists expected. Meanwhile, the U.S. Federal Reserve Board (Fed) raised the target range of its federal funds rate by 25 basis points, from 5.00 to 5.25%. After 10 consecutive increases, the Fed has suggested it may soon consider a pause.

An impasse over the U.S. debt ceiling weighed heavily on financial markets over the month, as U.S. lawmakers struggled to come to an agreement. The months-long stalemate highlighted the risks that a default could push the economy into a recession.

Read the full market commentary on canadalifeinvest.ca, including the following topics:

• Canadian inflation accelerates
• The Fed considers a pause
• The U.S. debt ceiling disagreement weighed on sentiment
• Global manufacturing activity weakens