Bank of Canada publishes some useful information. Monetary Policy Report, published by the bank is full of such data. Following are some interesting excerpts from the report.
- The economy is expected to reach full capacity in the second half of 2013.
- Core inflation is forecast to remain around 2%over the projection horizon, while total CPI inflation is expected to remain noticeably below the 2% target over the coming year before returning to target around mid-2013.
Those two statements almost clearly tell us that the Overnight Lending Rate is not likely to move up before mid 2013.
- Consumption and business investment are expected to be the primary drivers of growth, reflecting very stimulative domestic financial conditions.
- However, their pace will be influenced by external headwinds, notably the effects of lower commodity prices on Canadian incomes and wealth, as well as by record high household debt.
What we can understand from this statement is – although consumers are supposed to boost the economy by buying goods – since they are swimming in debt – it can be difficult. The Bank is not sure about the future buying power of the consumers.
Housing activity is expected to slow from record levels. Government spending is not projected to contribute to growth in 2012.
Government spendings will slow. Housing will take a hit. This is not a nice future after all.
Inflation is not a serious threat in near future.
The short-term lending rates are (variable rate) going to stay the same till BoC makes its move. Unfortunately the longterm rates are even lower than variable. So, who really worries about what happens to inflation?