GDP Report Impact On Bank Of Canada Rates - BNN Bloomberg

Canada's economy grew in the latest quarter. This makes it more possible that the Bank of Canada will increase interest rates. But, the bank may wait to see more data before making a move. Economists have said this.

Canada's economy grew at a better-than-expected pace of 3.1% in Q1 2023. This is more than the 2.5% projected by StatsCan. The information came from Stats Canada on Wednesday.

In April, the economy grew by 0.2%. Before that, in March, there was no change.

The economy is still strong despite the Bank of Canada's efforts to reduce high inflation, according to the numbers. Economists believe this could persuade the central bank to resume raising interest rates sooner than predicted.

Next week, the Bank of Canada may increase rates. This is not surprising, according to Derek Burleton. He is the deputy chief economist at TD Bank. There were positive signs in the second quarter that show strength.

He said in a TV interview that this would make the rate hike even higher than before over the summer.

The Bank of Canada might increase rates next week, but more likely in July. They want to look at the jobs market first. Statistics Canada will report on June 9, after the Bank of Canada’s meeting on June 7.

Burleton said some people may need more time to think. He thinks July is more likely than June.

Some economists agree after seeing the GDP snapshot on Wednesday morning.

Andrew Grantham from CIBC Economics said the April estimate was better than anticipated. This is surprising because of the public service worker strike that would have slowed the economy during that period.

The headline, growth composition and Q2 handoff were better than we thought. This may mean the Bank of Canada will increase their interest rates.

We think they will wait for more data before raising rates again. They might revise their forecasts in July. They won't hike rates next week.

Desjardins' Royce Mendes said that the economy grew by 3.1% annually. This was more than what most economists and the Bank of Canada predicted. In April, the economy was on a "solid footing" for the start of the second quarter.

He said that household spending is going up quickly, which makes it more likely that interest rates will go up in the summer.

He wrote that the Bank of Canada might raise rates next week. They may not change their decision yet, but it's possible they will tighten policy later this summer.

The chief economist at National Bank of Canada is called Stefane Marion. He thinks that people should calm down about the interest rate increase. Some people think that the interest rate could increase in June or July but Stefane Marion thinks that's too soon.

He showed that the StatsCan report indicates a decrease in business investments and profits. This may be due to the high interest rate increases over the past year. These effects are starting to become evident.

He said the central bank should wait for more information on inflation and the economy before making any decisions. This could happen in the fall.

Marion said it's too soon for the central bank to raise rates in June. She gave this statement in an interview with BNN Bloomberg on TV. She also said that this is because the Q1 data was better than what was expected.

Maybe staying neutral is the best choice at present.