Canadian economic activity came in a bit stronger than expected in July, but remained weak through the summer in a clear sign growth has begun to sharply slow down.
Even with the surprise upside in July, the data are consistent with an economy gearing down from a strong start to the year, as a reopening boom loses steam. Since April, growth has averaged just 0.1 per cent on a monthly basis. While the slowdown won’t be enough to stop the Bank of Canada from delivering another interest rate hike next month, policymakers will be closely monitoring the extent of softness in the economy to see how high they need to go to rein in inflation to the 2 per cent target.Governor Tiff Macklem has already increased the Bank of Canada’s overnight interest rate by 3 percentage points since March, and is expected to continue hiking through the rest of this year.
GDP growing at 1.2% ann. isn't a problem for BoC, it's inflation. In any case they are just 75bps away from 4% now. You'd think overnight rates at 4% or above should make them think, maybe even pause
This almost certainly seals another 0.75% interest rate hike in October and December each.