![]() ![]() April GDP landed flat compared to initial flash guidance that the economy grew by 0.2% with some of that miss explained by the upward revision to the prior month which was the only month that got revised. March GDP was revised up a tick from flat to a 0.1% gain. Some, like me, might be left wondering what was the point if the only incremental tightening turns out to be a quarter-point and question the BoC’s resolve to crush inflation risk in slow footed fashion. The BoC has skipped making rate changes along trend tightening or easing paths in past fine-tuning stages as it assesses a sweep of data and the recently softer than expected inflation print could provide some cover to take the summer to evaluate and come back recharged in September. The case against a hike in July is nevertheless not to be fully discounted even if not a base case by a slim margin. ![]() The last piece of information may be next Friday’s jobs and wages that I think will set a constructive tone. The narrative for how inflation risk has pivoted higher remains intact. ![]() An economy that is not yet making strides toward opening up disinflationary slack approaching two years after bond market tightening began and with no one believing they’ll hit their 2% inflation target requires another disciplinary jolt of monetary tightening in a race against the clock to contain inflation risk. On net, these developments bolster-not cement-the case for a BoC hike on July 12th and probably carry the day over the recent CPI figures. A suite of readings indicates that GDP growth is modestly exceeding the Bank of Canada’s Q2 forecast while its surveys of businesses and consumers point to unmoored inflation expectations and rising expectations for gains in house prices in a case of here-we-go-again. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |