The Bank of Canada announced this morning that it is holding its target for the overnight interest rate at 0.5 per cent. The Bank noted that inflation is on track to return to its target of 2 per cent by 2017, though heightened global uncertainty presents a risk to that forecast.
Economic growth in Canada appears to be slowing as expected in the second quarter. Our tracking estimate of second quarter real GDP growth is currently at -0.5 per cent following a strong start to the year.
Most of the slowdown is due to disruptions caused by the Alberta wildfires which points to a strong rebound as oil production comes back on-line and the reconstruction effort begins
Our forecast remains that the Bank will be sidelined for the remainder of 2016 and through most if not all of 2017.