Bank will remain on the sidelines this year

The Bank of Canada is unlikely to announce any major changes to either its economic projections or policy stance next Wednesday. The apparent rebound in third-quarter GDP and the surge in employment in September will provide some comfort that the economy is on the right track. Nevertheless, we still think that a housing downturn will hit economic growth next year and ultimately force the Bank to cut its policy rate from 0.50% to only 0.25%.