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11 Mar 2013
Forex Flash: Is Canada running out of time and luck? - Nomura
Nomura economist Charles St-Arnaud questions whether Canada is running out of time and luck as it looks like the rebound looks likely to be weak.
St-Arnaud begins by stating that he believes that growth will remain below potential for most of 2013, as he thinks that consumer spending and residential investment should moderate, while the expected rebound in business investment and exports is likely to be weak. Moreover, he expects the continued oil price differential to act as a drag on growth. He finishes by writing, “Despite the weaker outlook for the economy, we do not believe the Bank of Canada would cut rates because: (1) the economy is much less reactive to rates cuts, (2) the BoC would be concerned about reigniting an accumulation of household debt. We believe that the Bank of Canada will remain on hold until mid-2014.”
St-Arnaud begins by stating that he believes that growth will remain below potential for most of 2013, as he thinks that consumer spending and residential investment should moderate, while the expected rebound in business investment and exports is likely to be weak. Moreover, he expects the continued oil price differential to act as a drag on growth. He finishes by writing, “Despite the weaker outlook for the economy, we do not believe the Bank of Canada would cut rates because: (1) the economy is much less reactive to rates cuts, (2) the BoC would be concerned about reigniting an accumulation of household debt. We believe that the Bank of Canada will remain on hold until mid-2014.”