Comments from Bank of Canada Deputy Lane:
- First half of the year might see growth well below 2%
- Canadian economy will return to full potential in next couple of years
- Should continue to see stronger growth of Canadian non-energy exports, partly due to weak CAD
- Positive offsets from economy won't be enough to counterbalance oil
- Lower gasoline prices having transitory effect on overall inflation
- Canadian inflation may go negative temporarily
- Change in financial conditions in response to January rate hike was larger than we expected
Canadian January GDP is due out next Tuesday and Lane might be tipping the nod toward a poor report.
The bolded comment once again signals that the BOC is unlikely to cut unless it gets a very good reason. And with GDP already expected to be very soft in H1, that's a difficult task.
