Second-quarter pick-up in GDP growth won’t last

While the Bank of Canada presented a fairly balanced policy statement alongside its decision to keep interest rates unchanged at 1.75% this week, in the speech that followed a day later Senior Deputy Governor Carolyn Wilkins told us that policymakers remain upbeat about the outlook. Wilkins argued that much of the slowdown in the fourth and first quarters reflected temporary factors, including the sharp drop in oil prices, Alberta’s mandated oil production cuts and the unseasonably severe winter weather. With oil prices now higher and those weather effects fading, the Bank is confident that GDP growth will pick back up again.