GDP News could Delay Potential Interest Rate Hikes

Canadian GDP falls 0.2% in February – See the Statistics Canada Report – The Canadian economy unexpectedly shrank in February due to a slowdown in the mining and manufacturing sectors, dampening expectations that the Bank of Canada will raise interest rates soon.

From the Globe and Mail “Get used to this. There is no consensus about when the Bank of Canada will raise interest rates. The needle on the hike-o-meter will move with each piece of significant economy data. Last week, it was tilted strongly toward an increase in the Bank of Canada’s key rate. Now, the needle has swung back strongly toward neutral, as the February GDP numbers suggest the central bank’s prediction of growth at an annual rate of 2.5 per cent in the first quarter is optimistic. Most analysts say the economy will do well to hit a 2 per cent pace in the first quarter.”

Bank of Montreal deputy chief economist Doug Porter said “Much of the weakness looks temporary, but it drives home the point that the underlying growth rate is sluggish at best,”

Looks like we just need to wait and see.  In the meantime, Contact Us to discuss your options and avoid the risk of volatile rates!