Growth in the Canadian economy rebounded in the second quarter of 2018, with output expanding 2.9 per cent following just 1.4 per cent growth in the first quarter. Rising exports, an increase in household spending and a renovation spending driven rebound in housing investment were all major contributors to growth in the second quarter.
Very strong economic growth over the past year has pushed the Canadian economy beyond its full-employment level, creating upward pressure on inflation.
Consumer prices rose at a 3 per cent rate in July, the first time inflation has reached that level since 2011. Rising inflation and an economy operating beyond its capacity means that he Bank of Canada will continue on its rate tightening path.
The next rate hike could come as early as September though more likely in October once current NAFTA negotiations have concluded.