Canada Economics Update Bank of Canada could sell assets sooner than most One challenge for central banks as they consider reducing the size of their balances sheets is that, if they sell assets bought during the pandemic, they will likely face a financial loss. This is... 3rd February 2022 · 5 mins read
Canada Economics Update Bank stands pat but rate hike coming in March The Bank of Canada kept policy unchanged today but judges that the conditions to start raising interest rates have now been met, suggesting that it will hike its policy rate at the next meeting in... 26th January 2022 · 3 mins read
Canada Economics Update Will the Bank of Canada hike this month? We expect the Bank of Canada to wait for the coronavirus restrictions to be lifted before starting to raise interest rates, suggesting it is more likely to begin hiking in March or April than at its... 12th January 2022 · 3 mins read
Canada Economics Update Five key calls and five unknowns for Canada in 2022 We expect GDP to grow strongly once the current restrictions are eased, but we are sceptical that either GDP growth or inflation will be as high this year as widely anticipated. This leads us to think... 6th January 2022 · 5 mins read
Canada Economics Update Restrictions may not derail Bank’s tightening plans The closure of many high-contact services in Quebec yesterday is likely to soon be matched by tighter coronavirus restrictions elsewhere. That said, if other provinces also allow stores and... 21st December 2021 · 3 mins read
Canada Economics Update Government fails to deliver on election pledges The government’s fall fiscal update suggests the public finances will be in a better position in the coming years than we had assumed, but this is largely because the government chose not to deliver... 14th December 2021 · 3 mins read
Canada Economics Update Bank’s updated framework maintains the status quo The Bank of Canada’s updated policy framework will not have a material effect on policy over the next couple of years, but it does support our forecast that inflation will be slightly higher on... 13th December 2021 · 3 mins read
Canada Economics Update Bank keeps policy rate guidance unchanged The Bank of Canada’s unchanged policy rate guidance implies it could wait until the third quarter before raising rates but, given wage growth is now picking up sharply, we expect it to pull the... 8th December 2021 · 3 mins read
Canada Economics Update A last hurrah for housing We are not convinced by the Bank of Canada’s view that the renewed strength of house prices is due to “extrapolative expectations”. With mortgage rates jumping recently, the large price gain in... 2nd December 2021 · 4 mins read
Canada Economics Update Inflation unlikely to catch up with the US Price inflation in Canada and the US followed a similar trend in the 2010s, but we think the pandemic marked a turning point, and expect the former to remain lower than the latter. 18th November 2021 · 5 mins read
Canada Economics Update “Excess” savings unlikely to be a game-changer We are doubtful that a significant share of households’ “excess” savings will be spent. Even if we are wrong, there are several other downside risks to the consensus forecasts for consumption growth... 11th November 2021 · 5 mins read
Canada Economics Update Wage growth is stronger than it seems The “fixed-weight” average hourly earnings series that the Bank of Canada is following appear to be understating wage growth, but should provide a more accurate picture over the rest of the year. 2nd November 2021 · 4 mins read
Canada Economics Update Bank ends QE and pulls forward guidance on first hike The Bank of Canada called time on its QE program today and indicated that it could raise interest rates as soon as the second quarter of next year. The Bank’s GDP forecasts still look too upbeat to us... 27th October 2021 · 3 mins read
Canada Economics Update Labour shortages now widespread The expiry of the CRB this month may help to alleviate the shortages of unskilled labour, but there is little chance that the shortages of skilled labour will ease until immigration picks back up. And... 14th October 2021 · 4 mins read
Canada Economics Update What might prompt the Bank to take a hawkish turn? The sharp slowdown in economic growth in the past couple of quarters suggests that the probability of the Bank of Canada following other central banks in becoming more hawkish is low. The risk will... 6th October 2021 · 5 mins read
Canada Economics Update Withdrawal of CRB a risk to consumption Due to the still high household saving rate, we have so far been sanguine about the risks posed by the winding down of benefit payments to households. But with goods shortages limiting the scope for... 30th September 2021 · 3 mins read