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

Dawn Desjardins
Vice President, Deputy Chief Economist at RBC Royal Bank,