Theme 1: Inflation:
We are likely to see higher commodity prices combined with base effects from pandemic lows to push Canada’s headline inflation rate above 3% in Q2, before easing somewhat.
Theme 2: Bank of Canada:
Bond yields have risen as investors anticipate higher inflation. Inflation expectations have also picked up although remain anchored below the Bank’s 2% target.
Theme 3: Canadian GDP:
Our forecast is for Canada’s economy to grow 6.3% in 2021 with the output gap projected to close as early as in the first quarter of 2022.
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