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Commenting on the GDP data published by Statistics Canada on Friday, “we freely grant that recent economic performance has been disappointing,” said TD Securities analysts.

Key quotes

“Q4 growth printed at just 0.3% q/q, which is the economy’s slowest pace of growth since 2016H1, and even with a decent hand-off into 2020Q1 we are still looking for growth this quarter at roughly 1%, which would put it well below the economy’s trend rate.”

“The culprits behind sluggish performance haven’t changed much: flagging household spending, lacklustre business investment, and export competitiveness — but the BoC’s forecast already had conservative assumptions built in for 2019Q4 and 202Q1.”

“The realized data for Q4 is not going to shake the BoC from their outlook, and most recent market expectations for 2020Q1 are in line with the January MPR (the most recent Bloomberg survey pegged the consensus at 1.4%). From our perspective, the case for rate cuts hinges on the BoC outlook for the second and third quarters, as further downgrades there will be enough to spur the Bank into action — and we don’t think the Bank has seen enough data yet to drive such a radical revision.”