The Economic Pulse – March 2021 Edition
By
Dawn Desjardins
Published March 25, 2021
|
4 min watch
In this edition, we take a closer look at the outlook for inflation given the rise in vaccinations and upwardly revised growth forecasts. Canada’s inflation rate is expected to top 3% in Q2 then ease back toward the bank’s 2% target.
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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Dawn Desjardins
Vice President, Deputy Chief Economist at RBC Royal Bank,
Dawn Desjardins joined the Royal Bank Economics team in January 2006 as a senior economist. She is responsible for the macroeconomic and interest rate forecasts for Canada and the U.S. Previously, Dawn worked as a reporter for Bloomberg Financial News in Toronto covering the Canadian bond and currency markets. She was also the Canadian bond market strategist for a major U.S. bank for ten years. Dawn is a graduate of the University of Toronto.
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