Canada’s stronger-than-expected GDP growth in January could pose a challenge for the Bank of Canada, potentially complicating the timing for its anticipated interest rate cuts.
Economic growth rose 0.6% in January, and early estimates point to another 0.4% monthly rise in February, according to figures released by Statistics Canada.
The growth was largely influenced by a rebound in educational services (+6.0%), due to the resolution of public-sector strikes in Quebec, while goods-producing sectors were also up 0.2% on the month.
Should the flash estimate for February hold, BMO Chief Economist Douglas Porter noted that even a flat reading in March would result in annualized first-quarter growth of 3.5%. That would be well above the Bank of Canada’s current Q1 forecast for growth of just 0.5%.
