The overnight rate for the Central Bank was made public sometimes last week, the Bank aimed to have their overnight rate targeted at 0.5% as they continued to retain it. The expansion of the economy is expected to be at a lower rate than the recently estimated financial policy report for the month of July. The Bank commented; “This is due in large part to slower near-term housing resale activity and a lower trajectory for exports. The federal government’s new measures to promote stability in Canada’s housing market are likely to restrain residential investment while dampening household vulnerabilities.”
The growth of the economy will decrease for the first two years to come than expected, however, the export data seems to be getting better and improving by the day. BoC said; “After incorporating these weaker elements, Canada’s economy is still expected to grow at a rate above potential starting in the second half of 2016, supported by accommodative monetary and financial conditions and federal fiscal measures. As the economy continues to adjust to the oil price shock, investment in the energy sector appears to be bottoming out.”
The rate of employment, household expenditure, and separate earnings from energy-reliant regions seems to be on the increase. The state of the economy will develop to full capacity in the year 2018 much more that the initial forecast; The growth of the GDP is expected by the Bank to increase by 1.1% by this year, and by 2% in 2017 and 2018.
BoC mentioned; “Given the downward revision to the growth profile and the later closing of the output gap, the Bank considers the risks around its updated inflation outlook to be roughly balanced, albeit in a context of heightened uncertainty. Meanwhile, the new housing measures should mitigate risks to the financial system over time.
“At present, the Bank’s Governing Council judges that the overall balance of risks is still in the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.”