Benjamin Reitzes, a managing director of Canadian rates and macro strategist at BMO Capital Markets, said in a report released last week that the central bank’s June 7 policy rate decision could hinge on the GDP report.
interest rates at 4.5 per cent at its two most recent rate decisions, following an aggressive hiking campaign that started in March of last year. “We’re looking for first quarter GDP to climb 2.5 per cent annualized…but policymakers are anticipating a slowdown through the rest of the year, and firmer March and April readings would not be consistent with a slowing economy,” he said in the report.
“The March/ first quarter GDP report has the potential to change that dynamic. The flash estimate for March GDP came in at -0.1 per cent, continuing the decelerating trend through the first quarter,” he said. Despite April’s inflation figures, headline inflation is expected to ease to three per cent partway through the year, in accordance with Bank of Canada projections said Reitzes.
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