| ECONOMY: Canada to expand by 2.2% this year, and by 2.7% in 2008 and 2009, says Central Bank |
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(AlbertaIndex, April 26, Thursday) --- The Canadian economy is projected to grow by 2.2% this year, and by 2.7% in both 2008 and 2009, returning to its production capacity in the second half of 2007 and remaining there through 2008 and 2009, said the Bank of Canada. In its April Monetary Policy Report, which discusses current economic and financial trends, the bank said growth of the Canadian economy has been essentially in line with its expectations as set out in the previous report in January.There was a warning that the US slowdown could be “somewhat more prolonged than previously projected”, with the result that Canadian exports could be affected, exerting a slightly greater drag on growth in 2007. The central bank acknowledged that inflation has been higher than it had expected. It said: “Core inflation should remain slightly above 2% over the coming months, given pressures on capacity and the impact of higher core food prices. But with the economy projected to return to its production capacity in the second half of this year and with further easing of pressures from housing prices, upward pressure on core inflation is expected to moderate, bringing core inflation back to 2% by the end of 2007.” Total CPI inflation is projected to rise above the 2% inflation target in the second half of this year, peaking below 3% near the end of 2007 before returning to the target by mid-2008. The bank continues to judge that the risks to its inflation projection are roughly balanced, although there is now a slight tilt to the upside. On Tuesday, the bank left its key policy rate unchanged at 4.25%. The current level of the policy interest rate is judged, at this time, to be consistent with achieving the inflation target over the medium term. Did you enjoy this article? Please share it!         |
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