Slack Remains in Canada's Economy, Leaving Room for Bank of Canada to Stay on Hold

Dow Jones
07/31

1049 ET - Canadian GDP rebounded strongly in 2Q, yet there is still excess slack in the economy, Says Oxford Economics' Michael Davenport. The economist still expects headwinds from a shrinking population, U.S. tariffs, and elevated trade and geopolitical uncertainty to cause economic momentum to slow in 2H. This, Davenport says, will reinforce the Bank of Canada's patient stance since excess slack in the economy should help prevent higher energy prices from driving a pick-up in core inflation and the need for higher interest rates.

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