The Globe and Mail reports in its Friday, March 8, edition that the Bank of Canada acknowledges it is "surprised" by how abruptly the economy is decelerating. The Globe's Barrie McKenna writes that the central bank is now seriously rethinking its plan to keep raising interest rates. The shift stems from what happened in the fourth quarter, when Canada's gross domestic product grew at a paltry 0.4-per-cent annual pace, deputy governor Lynn Patterson said.
"Although we figured the economy was in for a detour at the end of last year, that detour may end up being longer than we had expected," Ms. Patterson said.
Nonetheless, she said the bank still expects the economy to "pick up" later in the year, buoyed by growth in jobs and wages.
Bank of Canada officials initially thought the slowdown would be confined to the oil sector, which was hit hard last year by a sudden price slump and pipeline bottlenecks.
Instead, virtually all the key components of GDP showed evidence of weakness. "While the anticipated slowdown from the energy sector was fairly aligned with our projections, other categories surprised us," Ms. Patterson said.
Mr. McKenna says many economists now do not expect the bank to hike again this year.
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