Bank of Canada stuck between a rock and a hard place

Canada's economic performance over the second half of last year was slightly stronger than the Bank of Canada had assumed at the start of the year, but there have been few signs of the rotation in demand towards exports and business investment that it has long hoped for. Considering the still uncertain global and commodity price outlook, we aren't holding our breath. Unfortunately, with households saddled with a historically high debt burden and a potentially prolonged housing downturn underway, stronger export and business investment growth may not come soon enough. Under these circumstances, monetary policy may have to become even more accommodating.