Economic Outlook

Canada Economic Outlook

The Canadian economy continues to operate near full capacity, with a trend-like advance of 2.0% expected in 2018. Although job growth has slowed this year, some moderation is expected at this point in the cycle. Meanwhile, inflation pressures are rising, with core readings right around the midpoint of the Bank of Canada's (BoC) target range, and wage growth at its fastest in more than five years. Furthermore, higher oil prices will push up headline inflation in the coming months. The BoC revised up their view on potential growth for 2018 in April, indicating that the economy has a bit more room to run, but capacity utilization rates are at decade highs and inflation expectations in the latest Business Outlook Survey moved up moderately. Thus, the BoC is projected to continue on a gradual path of rate hikes, with the next move in July, followed by one more later in 2018.