Canada Economics Weekly Canada avoids UK-style market fallout Canada is unlikely to succumb to the same crisis currently afflicting UK markets, but those problems are a reminder that rapidly rising interest rates have a habit of breaking things. In Canada’s case... 14th October 2022 · 7 mins read
Canada Economics Weekly Pivot, pause, tilt? Not yet, despite likely recession The hawkish speech from Governor Tiff Macklem this week suggests that the Bank of Canada has no intention of following the Reserve Bank of Australia in dropping down to a 25 bp hike at its next... 7th October 2022 · 5 mins read
Canada Economics Weekly Record immigration won’t make the Bank’s job easier The accepted wisdom is that strong immigration reduces the pressure on the Bank of Canada to raise interest rates, as it will eventually help to ease labour shortages. But the immediate impact has... 30th September 2022 · 6 mins read
Canada Economics Weekly Hawkish Fed forces the Bank to do more The hawkish message from the Federal Reserve this week has prompted us to revise up our forecast for the peak policy rate in Canada to 4.0%, even as the latest data suggest that inflationary pressures... 23rd September 2022 · 5 mins read
Canada Economics Weekly Peak rates likely to be lower in Canada We still expect the peak in interest rates to be markedly lower in Canada than the US, as household debt is a lot higher, labour market conditions are weaker and there is scope for a much bigger drop... 16th September 2022 · 6 mins read
Canada Economics Weekly Hike it till you break it The Bank of Canada’s hawkish communications this week, alongside its 75bp policy rate hike, suggest that it remains unfazed about the downside risks to activity and that it initially favours a 50bp... 9th September 2022 · 6 mins read
Canada Economics Weekly Disappointing recovery already grinding to a halt Two quarters of strong outperformance have not been enough for the recovery in GDP to catch up with that in the US and, with growth now grinding to a halt, the divergence is set to widen again. 2nd September 2022 · 6 mins read
Canada Economics Weekly Firms’ selling price expectations at 10-month low There was some better news from the CFIB Business Barometer and new home sales data this week, although both still point to weak economic growth. Meanwhile, the fall in firms’ selling price... 26th August 2022 · 5 mins read
Canada Economics Weekly Latest surge in travel prices should soon be reversed The further rise in core inflation in July was largely due to a surge in travel services prices, much of which should be reversed after the summer. Nevertheless, that rise in core inflation, the... 19th August 2022 · 4 mins read
Canada Economics Weekly Inverting to a hurting? Yield curve inversions have a patchy record of predicting recessions in Canada, but they almost always precede a sharp economic slowdown and the unusually deep nature of the current inversion makes it... 12th August 2022 · 7 mins read
Canada Economics Weekly Stagflation summer The further falls in home sales and employment in July add to the evidence that the economy is losing momentum. With no sign of a material easing of inflationary pressures, however, it is too soon to... 5th August 2022 · 3 mins read
Canada Economics Weekly Business surveys point to slower GDP growth The slump in the CFIB Business Barometer in July – to a post-pandemic low – shows that the jump in borrowing costs is hitting more than just the housing market. With the survey still pointing to... 29th July 2022 · 5 mins read
Canada Economics Weekly Inflation finally peaks CPI inflation has finally peaked but this will not be enough to prevent further large interest rate hikes from the Bank of Canada, especially as there is little evidence yet that the weakening housing... 22nd July 2022 · 4 mins read
Canada Economics Weekly Bank’s shock tactics carry significant risks The Bank of Canada justified its 100 bp interest rate hike on the basis that front-loading hikes has historically raised the chance of a “soft landing”. With the pace of house price declines already... 15th July 2022 · 5 mins read
Canada Economics Weekly Inflation expectations too high for the Bank The falls in commodity prices this week point to some relief ahead for CPI inflation, but the Bank of Canada will be more focused on the rises in long-run inflation expectations and wage growth in the... 8th July 2022 · 4 mins read
Canada Economics Weekly Economy losing momentum While the apparent contraction in GDP in May appears to have been partly due to temporary factors, it also reflects the impact of the surge in interest rates on housing. With the business surveys for... 30th June 2022 · 5 mins read
