Canada is close to running out of spare economic capacity for the first time since 2008, a big reason Governor Stephen Poloz may raise the central bank’s main interest rate for the second straight meeting on Wednesday. The Bank of Canada’s July forecast showed its two measures of slack averaged -0.5 percent in the second quarter, and Mark Chandler at RBC Capital Markets says it may now be a “meaningless” -0.1 percent after last week’s gross domestic product report. While Chandler sees policy makers waiting until October to tighten because there’s time before inflation picks up, Bank of Nova Scotia economists advanced their hiking call to Wednesday, with Brett House saying his shop’s measure of slack is zero and output will be 0.5 percent above potential by mid- 2018.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
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