A Disconnect from the Obvious

Canada’s GDP in Q4 2017 amounted to only 1.7%, far below economist’s forecast of 2.0% and the Bank of Canada’s estimate of 2.5%.
Economists warned Canadians that the growth see in early 2017 would not and could not last. The following chart shows just how dramatic the difference has been from the first two quarters of 2017 to the last two quarters.

Yet, the Bank of Canada, well aware of the anticipated slowdown, and well aware that the future of the Canadian Economy was in the air with NAFTA still on the table, and well aware of the protectionist mindset of the President of the United States, and well aware of the noncompetitive corporate tax levels throughout Canada, chose to increase interest rates at the last economic outlook meeting. Even first year economic students understand the role higher interest rates play in slowing down economies and as stated earlier, everyone but the Bank of Canada expected the Canadian economy to slowdown on its own accord.

Not surprisingly, reporters are calling for the Bank of Canada to announce no change in the Bank rate at its next meeting, scheduled for March 7th.

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