Sur­pris­ing growth surge forces fore­cast­ers to re­visit pre­dic­tions

Truro Daily News - - CANADA -

The econ­omy’s sur­pris­ingly pow­er­ful sec­ond-quar­ter per­for­mance is push­ing fore­cast­ers to change their out­looks — start­ing with pre­dic­tions for Wed­nes­day’s cen­tral bank rate an­nounce­ment.

Fresh data re­leased last week showed the econ­omy ex­panded at an an­nual pace of 4.5 per cent be­tween April and June — which fol­lowed an im­pres­sive jolt of 3.7 per cent growth in the first three months of the year.

Due to the strong mo­men­tum, sev­eral an­a­lysts are now pre­dict­ing the Bank of Canada to hike its trend-set­ting rate Wed­nes­day, in­stead of later this fall as most had ex­pected.

Sco­tia­bank’s Derek Holt is among those who moved up their rate call last week in large part be­cause growth has been beat­ing Bank of Canada fore­casts for an ex­tended pe­riod.

Oth­ers have be­gun to ques­tion whether the Trudeau gov­ern­ment’s multi­bil­lion-dol­lar in­fras­truc­ture com­mit­ment over the com­ing years could over­heat the al­ready-siz­zling econ­omy.

Na­tional Bank se­nior econ­o­mist Kr­ishen Ran­gasamy says Ot­tawa should con­sider de­lay­ing some of its planned in­fras­truc­ture spend­ing as the econ­omy strength­ens — oth­er­wise, the Bank of Canada may to forced to raise rates more ag­gres­sively.

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