Everything You Need to Know on Friday: TD's New CEO to Begin with Clean Slate, Faces Challenges Ahead, Says Shareholder

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,434.60, down 0.15% from previous close

● Bank of Canada's governor says artificial intelligence may add to inflationary pressures in near term

● BMO comments on possible "calm before The mortgage storm" in Canada

● TD Bank's CEO change promises fresh start amid money laundering probe

Today, the Canadian dollar is trading at 73.70 US cents, an increase from previous close.

Bank of Canada Governor Tiff Macklem stated on Friday that the adoption of artificial intelligence (AI) by businesses might initially increase demand more than supply, potentially heightening inflationary pressures due to accelerated productivity growth. However, he noted that in the long term, AI is expected to significantly enhance productivity.

During a speech in Toronto, Macklem explained, "In the short run, AI could boost demand more than it adds to supply through faster productivity growth, which may add to inflationary pressures." Over many years, the full impact of AI on productivity will unfold, eventually leading to higher wages and increased spending without inflating prices.

Macklem also highlighted the Bank of Canada's current use of AI, which includes forecasting inflation and economic activities, tracking economic sentiment, and improving operational efficiency and data management. He emphasized that the central bank has just begun to explore the potential of this technology.

The Bank of Montreal (BMO) reported that the latest monthly household credit figures in Canada for Thursday show a continued stable trend. Overall credit increased by a modest 3.6% year-over-year, with mortgage growth nearly steady at 3.5%.

BMO highlighted that this level of growth has been consistently calm, remaining below 4% for the past two years and is the slowest it has been in over two decades. The bank also noted that credit growth has recently aligned with inflation rates after exceeding them for two decades.

Looking ahead to 2025, BMO suggests potential changes due to falling interest rates and new mortgage regulations, which might strengthen the housing market and slightly increase mortgage growth. This scenario contrasts sharply with the previously feared 'mortgage cliff,' as per BMO's analysis.

Portfolio Manager and TD shareholder, Paul Harris, said that the change was necessary for accountability and praised the bank's handling of the situation. He views the upcoming leadership change as an opportunity for Chun to start with a clean slate and set a new strategic direction.

Previously, Bloomberg News reported that TD might face over US$3 billion in penalties related to compliance failures in the U.S. In response, Masrani stated he takes full responsibility for the lapses and is committed to leading the bank's remediation efforts.

Looking ahead, Harris noted challenges for Chun in strengthening TD's U.S. presence, given the competitive landscape compared to Canada. Despite recent issues, he remains optimistic about the bank's potential for improvement and growth in the U.S. market.

Source: BNN Bloomberg, MT Newswires