Canadian economic activity has remained strong in Q1. Consumer demand is robust, so is housing, experiencing a late cycle spurt. Industrial capacity is tight as are labor market conditions. Core inflation remains worrisome and the BoC is likely to announce another 25 basis point tightening in its policy rate later this month. ER&C expects real economic growth of 3.1% this year.
Consumer demand is robust. External trade is unlikely to exert a drag on growth. Labor market conditions remain very tight. Housing is experiencing a late cycle spurt. Consumer inflation is not yet entirely subdued. The end-2006 10-year bond yield is forecast to be 5.0%.
( Full Report, 1 pages, pdf).
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