BRITISH COLUMBIA – The Canadian economy remained essentially flat on a month-over-month basis in December amid new restrictions implemented to control the Omicron variant.
Canadian real GDP is roughly 0.3 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy grew 0.2 per cent in January.
Growth in 2021 clocked-in at a robust 4.6 per cent, while the economy accelerated in the fourth quarter with real GDP growth hitting 6.7 per cent annualized. Even with an expected Omicron driven slowdown in the first quarter of 2022, the Canadian economy is clearly on a very strong growth path.
At its most recent meeting, the Bank of Canada noted that the slack in the Canadian economy has been largely absorbed and indicated that the bank intends to raise rates following its March 2nd meeting amid strong growth and elevated inflation. The expectation is that the bank will continuing quarterly rate hikes until the overnight policy rate reaches 1.75 per cent, well-above the accommodating 0.25 per cent level which has remained in place since the onset of the crisis.
