Canada Economics Update Inventory building will not transform the outlook There is scope for inventory building to boost GDP growth in the near term but, as the US experience has recently demonstrated, this could raise the risk of GDP falling in the following quarters. 4th August 2022 · 2 mins read
Canada Economics Update Loonie unlikely to have big bearing on policy outlook Governor Tiff Macklem has voiced concern about the inflationary impact of the loonie, but we doubt that a modest fall would prevent the Bank of Canada from pausing its tightening before the Federal... 28th July 2022 · 3 mins read
Canada Economics Update Housing Watch (Jul.) The further decline in home sales in June and the record monthly fall in house prices did little to affect construction activity, with housing starts once again outperforming expectations last month... 19th July 2022 · 4 mins read
Canada Economics Update Bank pulls out all the stops with 100 bp hike The Bank of Canada’s 100 bp hike today and its accompanying communications have led us to upgrade our forecast for the policy rate to 3.5% by the October policy meeting, from 3.0%. As the commodity... 13th July 2022 · 3 mins read
Canada Economics Update House prices to slump by 20% The Bank of Canada’s hawkishness, a widening of mortgage spreads, and news that at least one lender is restricting new loan applications suggest the outlook for house prices is worse than we... 16th June 2022 · 2 mins read
Canada Economics Update Bank risks sending housing into a tailspin The Bank of Canada’s recent communications suggest that it will be unfazed by the second consecutive double-digit drop in home sales in May. This raises the chance of the Bank enacting a larger... 7th June 2022 · 4 mins read
Canada Economics Update Bank hikes rates by 50bp again and hints at even more The Bank of Canada hiked its policy rate by another 50bp, to 1.5%, today and, after warning that "the risk of elevated inflation becoming entrenched has risen", closed the accompanying statement with... 1st June 2022 · 3 mins read
Canada Economics Update Fall in house prices to contribute to lower CPI inflation The 10% fall in house prices that we expect over the next 12 months will also help to pull down CPI inflation, via its impact on shelter costs. Admittedly, shelter inflation is unlikely to decline... 16th May 2022 · 2 mins read
Canada Economics Update Spring market brings deep freeze for home sales The steep declines in home sales across Canada’s major cities reinforces our view that a downturn in residential investment will prevent the Bank of Canada from raising interest rates by as much as... 4th May 2022 · 2 mins read
Canada Economics Update Bank in hawkish mode The Bank moved into full-blown hawkish mode today, hiking its overnight policy rate by 50bp to 1.00% and announcing that quantitative tightening will start later this month, with no caps on the value... 13th April 2022 · 3 mins read
Canada Economics Update Budget 2022 unlikely to move the needle for the Bank The government announced a smorgasbord of new policies in the 2022 Budget, but the total increase in the budget deficit, at just $7bn, was arguably far lower than some feared. Moreover, as most of the... 7th April 2022 · 3 mins read
Canada Economics Update Budget 2022 could exacerbate inflationary pressures The government looks set to use its 2022 budget next week to outline a further increase in spending. While this will be modest in the context of the stimulus provided during the pandemic, it comes at... 29th March 2022 · 3 mins read
Canada Economics Update Can the housing market handle higher interest rates? The rise in mortgage rates implied by our new higher policy rate forecasts would reduce affordability by 12% over the next year which, in isolation, is not especially alarming when considering that... 17th March 2022 · 4 mins read
Canada Economics Update Current account set for largest surplus since 2006 The surge in commodity prices means that, after ending last year in deficit, the current account is set to move into a surplus of around 1.5% of GDP in the first half of this year. 10th March 2022 · 4 mins read
Canada Economics Update Higher forecasts for GDP, inflation and interest rates Surging commodity prices have led us to substantially increase our forecasts for consumer price inflation, but the negative impact of higher prices on household purchasing power, and therefore real... 9th March 2022 · 5 mins read
Canada Economics Update Assessing the impact of the war in Ukraine for Canada Higher commodity prices and stronger immigration from Ukraine are potential benefits for Canada’s economy from the war in Ukraine, but there is a risk that near-term real GDP growth disappoints due to... 2nd March 2022 · 3 mins read
