BoC lowers 2021 growth forecast to 5.1% from 6%
|The Bank of Canada (BoC) said in its fall Monetary Policy Report (MPR) that it lowered the 2021 Gross Domestic Product (GDP) growth forecast to 5.1% from 6% in July's MPR.
Key takeaways from MPR as summarized by Reuters
"2021 Q2 annualized GDP was -1.1% (vs +2.0% in July MPR), Q3 annualized GDP seen +5.5% (vs +7.3%), Q4 annualized GDP seen +4.0%."
"Output gap was between -2.25% to -1.25% in Q3, smaller than revised estimate of -3.25% to -2.25% in Q2."
"Significant uncertainty surrounds outlook for GDP and potential output."
"Canada Q4 annual inflation rate likely to hit 4.8%; around one-third of this will come from higher energy prices."
"Overall Canada 2021 inflation seen at 3.4% vs 3.0% in July MPR, 2022 inflation seen at 3.4% (2.4%) dipping to around 2% by end 2022, in 2023 seen at 2.3% (vs 2.2%)."
"Realization of upside risks to inflation could lead to rise in inflation expectations along with more pervasive labor cost and inflationary pressures."
"Canadian economy is once again growing robustly; labor market recovery is well under way but incomplete."
"Potential output growth to average about 1.6% per year over 2021-23, down 0.2 percentage points from July MPR."
"US growth seen +5.6% in 2021 vs +6.6% in July MPR, +3.9% in 2022 (vs +5.1%) and +2.7% in 2023 (vs +1.8%)."
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