Canada's Economy Shows Consistent Growth With A Chance For More Hikes
As we approach the end of the year, the economy of Canada is showing resilience and even growth which is a good thing. But this also raises the case that the central bank would move towards raising the borrowing costs.
The data shows that the Canadian GDP increased by 0.1% during November. Earlier, the same amount of gains were seen during October. These figures match the estimate made by the group of economists.
The gains during the month of October and November suggests that the GDP growth in Canada is much better than the expectations. If things go as planned, there's a chance that the Canadian economy will grow by 1.2% during the 4th quarter. As for the 2-year yield of Canada, it increased to 3.89%, which is an increase of around 7 basis points.
Most economists were of the view that a 0.6% increase in the GDP would happen during the 4th quarter of 2022. In fact, many thought that a technical recession in Canada was highly likely during 2022. Similarly, the Bank of Canada had a forecast of 0.5% growth in GDP.
The recent report was released just a few days before the inflation data... But after the recent results, the hopes of the central bank stopping its rate hikes have become very slim. The actual decision will be taken by the central bank of Canada during its 25th January meeting.
Many analysts believe that this will force the central bank to raise interest rates in an attempt to bring inflation below the 2% target.
It seems that the current economic landscape in Canada will put the central bank at worry. We also have to account for the fact that an increase in the GDP can also raise the inflation rate in Canada. And to stop it from happening, it seems that the central bank would want to make borrowing more expensive.