IMF states Canadian economy will pick up speed

“Canada’s economy will pick up speed in 2014, thanks in great part to stronger growth in the United States, as both countries shake off a chilling start to the year, the world’s key lending agency said Tuesday. But the International Monetary Fund, in its latest analysis of global growth and trends, cautioned external risks still exist for both countries and urged the Bank of Canada, in particular, to hold off raising its key interest rate until solid growth takes hold. ‘Although external demand could surprise on the upside, downside risks to the outlook still dominate, including from weaker-than-expected exports resulting from competitiveness challenges, lower commodity prices, and a more abrupt unwinding of domestic imbalances,’ the Washington-based IMF said in its report.” Gordon Isfeld wrote for the Financial Post. Isfeld continued, “‘Indeed, despite the recent moderation in the housing market, elevated household leverage and house prices remain a key vulnerability. With inflation low and downside risks looming, monetary policy should remain accommodative until growth gains further traction.’ The Bank of Canada’s trendsetting lending rate has been at a near-record low of 1% since September 2010. In October, bank governor Stephen Poloz dropped the pro-rate-hike stance, saying instead that policymakers had adopted a neutral position — meaning borrowing costs could eventually go down if the economic data deteriorates.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

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