Bank may regret rate increases

If there was still any doubt that the Bank of Canada would leave its key policy rate at 1% next Tuesday, the news this week that third-quarter GDP increased by only 1.0% annualised should have dispelled it. With growth unlikely to be much stronger in the fourth quarter, there is now little prospect that the Bank will resume its tightening cycle for some considerable time. Indeed, with the economy not that far from a double-dip recession, we suspect that Bank officials may come to regret the modest tightening they undertook over the summer.