It’s a good new, bad news story. The headline data in Friday’s report on the country’s GDP growth – or perhaps more accurately lack of growth – caught observers by surprise.
Everyone was thinking it would remain unchanged from June but it came in below expectations. In fact, it was negative if you annualize it.
That’s the bad news — that the national economy is stalling. The good news from that is economists are now expecting the news was enough to sideline the Bank of Canada. Conventional wisdom was that the central bank would hike interest rates again this week but now, in the face of this report, the betting line has moved the other way with most now thinking the bank will just pause.
A weekend report from RBC, for example, predicted the central bank pulling back to let earlier interest rate hikes work their way through the system. That’s how they see the July GDP numbers — that earlier interest rate hikes are starting to slow things down. It just took longer than expected to work their way through the economy.
