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
Canada Economics Update Modest policy loosening to follow election There has been almost no change in the distribution of seats in Parliament following the election, but it seems likely that the minority Liberal government will press on with a modest loosening of... 21st September 2021 · 3 mins read
Canada Economics Update Canada’s election unlikely to be a key driver of the loonie We doubt that the outcome of next week’s federal election in Canada will have much bearing on the economy and the loonie. Instead, we still think that bond yield differentials and oil prices will be... 17th September 2021 · 2 mins read
Canada Economics Update Inflation to remain near 4% for next six months Recent developments have prompted us to revise up our inflation forecasts for the coming few quarters, although we still expect inflation to decline to less than 2% in the second half of next year. 16th September 2021 · 4 mins read
Canada Economics Update Conservative victory won’t be a game-changer The costed election platform released by the Conservatives this week suggests that, if they were to form a government after this month’s election, they would run a similar fiscal policy to the Liberal... 9th September 2021 · 3 mins read
Canada Economics Update Bank on hold ahead of likely October taper There are some emerging downside risks to the economic outlook both domestically and globally but, after taking a well-anticipated pause at this meeting, we do not expect those risks to prevent the... 8th September 2021 · 3 mins read
Canada Economics Update Is the Bank right to dismiss CPI-trim and CPI-median? We are not convinced by the Bank of Canada’s recent claim that CPI-trim and CPI-median are currently overstating underlying inflation, although their elevated level compared to CPI-common is mainly... 26th August 2021 · 5 mins read
Canada Economics Update What’s going on with wages? Distortions to the data mean it is hard to gauge the current pace of wage growth, but the business surveys suggest it will soon head back to pre-pandemic levels. Given the Bank’s upbeat view on the... 11th August 2021 · 4 mins read
Canada Economics Update How do our key calls compare with the consensus? Our expectations for GDP growth and inflation this year are close to the consensus but, beyond then, we think both will be weaker than most expect. This is likely to feed through to a fall in the... 4th August 2021 · 4 mins read
