The surge in employment in July following last week’s strong preliminary second-quarter GDP growth estimate is further evidence that the economy is gaining momentum after a weak start to the year. While the Bank of Canada is likely to sound more hawkish following the fall in the unemployment rate, they are unlikely to rush into tightening policy given the ongoing softness of wage growth and core inflation. Indeed, for now we are sticking to our view that the Bank will remain on hold this year.
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