Canada Economics Update Inflation to be above 2% for most of 2021 Recent developments suggest that inflation will recover more strongly in 2021 than we previously thought. We now expect inflation to be above 2% for most of the year, before dropping back in 2022. 17th December 2020 · 4 mins read
Canada Economics Update Bank will probably stick to implicit yield curve control The key change to the Bank of Canada’s policy statement today was its commitment to “keep interest rates low across the yield curve”. This is in line with our view that, even as the economy rebounds... 9th December 2020 · 3 mins read
Canada Economics Update Economy to recover strongly after weak end to 2020 The recovery is set to go into reverse in December amid the latest coronavirus restrictions, and we now think GDP will stagnate over the first quarter. But the high effectiveness of the first COVID-19... 2nd December 2020 · 3 mins read
Canada Economics Update Government plans investment of up to 4.3% of GDP The government announced today that it expects to spend an additional $50bn this fiscal year to combat the damage from the second wave of the coronavirus. It also laid out plans for an investment... 30th November 2020 · 3 mins read
Canada Economics Update Spending to underperform, but only in the near term Retail sales are likely to fall further behind those in the US amid the latest coronavirus-related restrictions, particularly because the Canadian data do a worse job at capturing online sales... 26th November 2020 · 3 mins read
Canada Economics Update “Circuit breaker” lockdowns the key risk to activity The high-frequency data suggest the targeted restrictions imposed last month have not weighed much on broader activity, but worsening COVID-19 outbreaks raise the risk that “circuit breaker” lockdowns... 19th November 2020 · 4 mins read
Canada Economics Update Vaccine could reduce size of further fiscal support The rollout of an effective vaccine in early 2021 would cause us to pull up our growth forecasts for next year, but the boost to GDP in 2022 could be much smaller if the improved near-term outlook... 10th November 2020 · 4 mins read
Canada Economics Update Easing of restrictions may not last The imminent easing of restrictions in Ontario is another reason to think that GDP will keep rising in the fourth quarter, but there is clearly a significant chance that restrictions will be reimposed... 5th November 2020 · 3 mins read
Canada Economics Update Bank alters QE and beefs up forward guidance While the Bank of Canada today trimmed the pace of its QE purchases, we agree with its claim that the program should be as stimulative as before providing those purchases are focused on longer-term... 28th October 2020 · 3 mins read
Canada Economics Update US election effects to be outweighed by other factors A Democratic clean sweep in the US election is probably the scenario that would be most beneficial for Canada’s GDP, but the effects would still be far outweighed by other factors. 27th October 2020 · 4 mins read
Canada Economics Update Bank’s balance sheet to expand again soon The Bank of Canada’s balance sheet has been shrinking in recent weeks, as demand for its emergency repos loans continues to subside, and it will experience a bigger fall next spring, when the 12-month... 20th October 2020 · 4 mins read
Canada Economics We expect Canadian dollar appreciation to persist We are upgrading our already above-consensus forecast for the Canadian dollar, as we expect higher oil prices, stronger-than-expected GDP growth, and favourable interest rate differentials to drive a... 19th October 2020 · 3 mins read
Canada Economics Update Bank of Canada too downbeat on growth and inflation We think the Bank of Canada’s GDP forecasts are too weak given it assumes there will not be a second wave of the virus. Even if there is one, the Bank is likely underestimating the potential for... 29th July 2020 · 4 mins read
Canada Economics Update Business Outlook Survey (Q2) The latest Business Outlook Survey somewhat surprisingly shows that Canadian firms have convinced themselves a recovery is just around the corner, even though the weak global backdrop and evidence of... 28th June 2019 · 2 mins read
Canada Economics Update Home equity loans to have limited impact The full details of the new first-time buyer (FTB) equity loan scheme do not change our view that it will have little effect on the housing market. While the recent drop in mortgage rates will help to... 18th June 2019 · 1 min read