For those seeking additional perspective, here’s a sampling of the latest econospeak…
“…over roughly the past twenty years, the BoC has generally avoided starting a tightening campaign in an election. It only did so in 1997, and that was because the economy was rapidly healing after the disaster of the first two thirds of the 1990s via over 734,000 jobs having been created in the back to back years of 1997-98. Now, if a May or June vote is in the cards, that adds to a long list of reasons why most analysts have abandoned much of any notion of a Spring hike.”
Derek Holt and Gorica Djeric (Scotiabank’s DailyPoints)
“We take this opportunity to reinforce our longstanding view that the BoC is on hold until October of this year (or possibly later)…”
“In a nutshell, we believe the market has overreacted by pushing the next Bank of Canada tightening out to October. Rates are far below neutral, the output gap is disappearing fast, and even the U.S. economy is rounding into much better shape. These factors should rule the roost by the time the July decision date rolls along.”
Doug Porter, deputy chief economist at BMO Capital Markets (FOCUS)
“If [the BOC] had any intention to raise rates in May, normally they would have sent a signal in the monetary policy review in April. But if that’s in the middle of [an election] campaign, they might mask the language.”
Doug Porter, deputy chief economist at BMO Capital Markets (Canadian Press story)
“I don’t think (the first hike being in October) is consistent with economic fundamentals. It’s more consistent with a lot of the financial market turmoil and fears of issues in Japan and the Middle East accelerating. The bigger issue is the fact that growth is certainly stronger than (the Bank of Canada) expects.”
David Tulk, chief Canada macro strategist at TD Securities (National Post story)
“..ongoing event risk associated with Middle East unrest and Japan’s tragic natural disaster, the risk to the recovery posed by elevated oil and commodity prices and CAD strength all argue for steady policy through mid-year, which will be facilitated by tame underlying CPI and ample spare capacity … we now peg the July of 2011 announcement as the first in a series of 25 basis point rate hikes expected to last into next year.”
Action Economics forecast
Steve Huebl & Rob McLister, CMT
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