Data released on Friday, showed the Canadian economy expanded 0.1% in October. Analysts at CIBC point out the upward revision to September and the modest growth in October/November leaves Q4 GDP tracking between 1% and 1.5%, which is above the Bank of Canada’s October Monetary Policy Report forecast of 0.5%.
“Statistics Canada provided a small dose of Christmas cheer, with news that the Canadian economy continued to grow (albeit only modestly) at the start of the fourth quarter. Combined with a slight upward revision to September, today’s data leave Q4 as a whole tracking around 1.3%. That’s above the Bank of Canada’s October projection for growth of only 0.5% during the quarter, although not by enough on its own for us to project a further interest rate hike.”
“The industry data can sometimes diverge from the final expenditure figures, and we suspect that the employment data for December and the BoC’s own business and consumer surveys will be more important in determining if policymakers raise interest rates any further. We maintain our view for a hold at the January meeting, and feel that the Bank has already done enough to slow the economy and inflation notably in 2023.”