Bank of Canada deploying forecast 'fiction,' scotiabank economist says
BNN Bloomberg
The Bank of Canada is using its economic forecasts to try to prevent medium-term rates from falling too much and stoking more housing market speculation, according to a top economist.
Derek Holt, head of capital markets economics at Bank of Nova Scotia, described Governor Tiff Macklem’s tactics as “stealth forward guidance” after the central bank raised its benchmark rate to a 22-year high of 5 per cent on Wednesday.
The decision was accompanied by a new set of economic projections that see the economy headed for a soft landing, with growth averaging about 1 per cent over the next 12 months. Output is then expected to pick up again, to 2.5 per cent in 2025, while inflation eases over the next two years until it’s back at the bank’s 2 per cent target.
To Holt, that forecast “deserves a place on the fiction shelves at your favorite bookstore or the virtual equivalent.”
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Markets in Canada and the U.S. continued to trade lower while oil went up late morning on Friday as inflationary fears prevailed among investors.
Gold prices fell by 1.8 per cent on Friday as the dollar strengthened on a report that the United States will deploy extra troops in the Middle East, fanning concerns of higher oil prices, inflation, and with it, elevated interest rates.
Canada’s federally backed farm lender is offering financial aid to farmers, agricultural businesses and food companies hit by the spike in fertilizer and energy prices, it said on Friday.
Statistics Canada says retail sales were up 1.1 per cent at $70.7 billion in January, led by sales at motor vehicle and parts dealers.
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Wall Street is stumbling toward the finish line of a fourth straight losing week on Friday, but an ease in oil prices is taking some of the pressure off stock markets worldwide.