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.
For RBC’s latest in-depth economics research and analysis, please visit RBC Economics.
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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