{"id":9048,"date":"2021-04-21T16:54:59","date_gmt":"2021-04-21T16:54:59","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/04\/21\/bank-of-canada-hikes-economic-forecast-opening-door-to-rate-hike-in-2022\/"},"modified":"2021-04-21T16:54:59","modified_gmt":"2021-04-21T16:54:59","slug":"bank-of-canada-hikes-economic-forecast-opening-door-to-rate-hike-in-2022","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/04\/21\/bank-of-canada-hikes-economic-forecast-opening-door-to-rate-hike-in-2022\/","title":{"rendered":"Bank of Canada hikes economic forecast, opening door to rate hike in 2022"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> Now expects slack in economy to be absorbed in the second half of 2022 <\/p>\n<div class=\"article-meta\">\n<div class=\"published-by\">\n<p>Author of the article:<\/p>\n<p> <span class=\"published-by__author\">Kevin Carmichael<\/span> <\/div>\n<div class=\"published-date\">\n<p>Publishing date:<\/p>\n<p> <span class=\"published-date__since\">Apr 21, 2021<\/span> \u00a0\u2022\u00a0 <span class=\"updated-date__since\">4\u00a0hours ago<\/span> \u00a0\u2022\u00a0 <span class=\"published-date__word-count\">4 minute read<\/span> \u00a0\u2022\u00a0 <span>  <span class=\"comment-bubble\"> <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" height=\"16px\" viewbox=\"0 0 24 24\" width=\"16px\"><path d=\"M4,0 C2.93914,0 1.921718,0.421428 1.171572,1.171572 C0.421428,1.921718 0,2.93914 0,4 L0,24 L3.846,20.158 L4,20.16 L20,20.16 C21.0608,20.16 22.0782,19.73858 22.8284,18.98842 C23.5786,18.23828 24,17.22086 24,16.16 L24,4 C24,2.93914 23.5786,1.921718 22.8284,1.171572 C22.0782,0.421428 21.0608,0 20,0 L4,0 Z M2,4 C2,3.46956 2.21072,2.96086 2.58578,2.58578 C2.96086,2.21072 3.46956,2 4,2 L20,2 C20.5304,2 21.0392,2.21072 21.4142,2.58578 C21.7892,2.96086 22,3.46956 22,4 L22,16.16 C22,16.69044 21.7892,17.19914 21.4142,17.57422 C21.0392,17.94928 20.5304,18.16 20,18.16 L4,18.16 L3.048,18.126 L2,19.174 L2,4 Z\"\/><\/svg><\/span> 10 Comments  <\/span> <\/div><\/div>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio featured-image-category__economy\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=564&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=1128&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=564&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=1128&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=472&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=944&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=472&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=944&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(max-width: 767px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=288&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/tiff-macklem0421.jpg?quality=90&amp;strip=all&amp;w=576&amp;type=webp 2x\" type=\"image\/webp\"\/><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">Bank of Canada Governor Tiff Macklem. <\/span> <span class=\"credit\">Photo by Sean Kilpatrick\/Pool via Reuters\/File Photo<\/span> <\/figcaption><\/figure>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-1\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<div class=\"embedded-video\">\n<div fallback=\"\">\n<div class=\"video-fallback\">\n<p>We apologize, but this video has failed to load.<\/p>\n<\/p><\/div><\/div>\n<p> <iframe loading=\"lazy\" title=\"Release of the Monetary Policy Report \/ Publication du Rapport sur la politique mon\u00e9taire\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/zn2d9Sj8coY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe> <\/iframe> <\/div>\n<p>Canada\u2019s central bank has decided to ease back on the throttle, given that revised calculations show the economy is on a much better trajectory than policy-makers anticipated at the start of the year.<\/p>\n<p data-async=\"\">Policy-makers said the improved outlook implies higher interest rates in the second half of 2022, instead of their previous assumption that they would need to keep the benchmark rate near zero until sometime in 2023 to bring about a sustained recovery. They also said they would taper their purchases of federal debt starting next week.<\/p>\n<p>To be sure, the third wave of coronavirus infections is cause for concern at the central bank. It also remains unusually difficult to get a read on where the economy is headed, because of the upheaval that has come in the wake of the pandemic. The Bank of Canada emphasized in its latest batch of communications on April 21 that \u201cachieving a full recovery will take time,\u201d and that \u201cstrong and sustained growth will be needed to overcome the pandemic\u2019s severe economic impacts.\u201d<\/p>\n<p>In other words, governor Tiff Macklem will do what he needs to do to keep interest rates unusually low for a longer period of time than an orthodox approach to monetary policy would imply is appropriate. \u201cEven as economic prospects improve, the Governing Council judges that there is still considerable excess capacity, and the recovery continues to require extraordinary monetary policy support,\u201d the central bank said in an updated policy statement.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Still, it\u2019s worth remembering that entrepreneurs, executives and consumers always find ways to adapt. Rather than buckle in the face of the second onslaught of COVID-19 last winter, the economy pushed ahead, posting an annual growth rate of seven per cent in the first quarter, crushing the central bank\u2019s previous prediction of a contraction.<\/p>\n<p data-async=\"\">Overall, the central bank said it now predicts that gross domestic product will grow at 6.5 per cent this year, compared with its previous estimate of four per cent, led by household consumption, housing, exports and extraordinary government spending. That means the economy is on track to fill in the massive hole left by the COVID-19 recession by the end of the year, which would mark a swifter recovery than occurred after the Great Recession a decade ago.<\/p>\n<figure class=\"embedded-image\"><picture class=\"embedded-image__ratio\"><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=564&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=1128&amp;type=webp 2x\" media=\"(min-width: 1200px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=564&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=1128&amp;type=jpg 2x\" media=\"(min-width: 1200px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/jpeg\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=472&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=944&amp;type=webp 2x\" media=\"(min-width: 768px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=472&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=944&amp;type=jpg 2x\" media=\"(min-width: 768px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/jpeg\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=288&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=576&amp;type=webp 2x\" media=\"(max-width: 767px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><img decoding=\"async\" alt=\"\" class=\"embedded-image__image lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=288\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=288,&#10;                https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/FP0421-2021-BOC-RATE.png?quality=90&amp;strip=all&amp;w=576 2x\" height=\"654\" loading=\"lazy\" width=\"1000\"\/><\/picture><\/figure>\n<section aria-labelledby=\"moreTopicLabel1331033878926734339366643125254022\" class=\"more-topic\" data-carousel-icon-button=\"\" data-carousel-type=\"list\"><button aria-hidden=\"true\" class=\"more-topic__button-prev\" data-carousel-prev=\"\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/><\/p>\n<ol class=\"more-topic__items list-unstyled\" data-carousel-slide-list=\"\" tabindex=\"0\">\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"The Bank of Canada building in Ottawa.\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/vw0421bank-of-canada.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/vw0421bank-of-canada.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/vw0421bank-of-canada.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/vw0421bank-of-canada.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> Bank of Canada maintains interest rate: Read the official statement <\/span><\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"High home prices and child care costs hurt Canada more than people think, economically hampering our next generation of workers and spenders, says Manulife chief economist Frances Donald.  &#10;\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/home-prices0421.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/home-prices0421.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/home-prices0421.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/home-prices0421.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> Forget bubbles, Canada has a housing affordability crisis: Frances Donald <\/span><\/h3>\n<\/li>\n<\/ol>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-next\" data-carousel-next=\"\" tabindex=\"-1\" title=\"next\" type=\"button\"\/><\/section>\n<p>The Bank of Canada is pointedly refusing to declare victory, but given those relatively happy facts, its leaders concluded their latest round of interest-rate deliberations with a decision to begin withdrawing some of their extraordinary stimulus. Macklem and his deputies said the bank would reduce its weekly purchases of Government of Canada bonds to $3 billion from $4 billion, a first step toward ending an extraordinary policy known as quantitative easing (QE) and putting it back in the armoury.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-3\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>\u201cThis adjustment to the amount of incremental stimulus being added each week reflects the progress made in the economic recovery,\u201d the Bank of Canada said.<\/p>\n<p>Policy-markers remain troubled by the outlook. There are still 300,000 fewer people working today than at the beginning of the pandemic, and the Bank of Canada noted the shortfall is actually about 475,000 if you take into account where population growth would have pushed employment if not for the epic recession.<\/p>\n<p>Behavioural changes, such as the shift to e-commerce and increased working from home, will probably lead to structural changes that aren\u2019t reflected in the central bank\u2019s history-based models. That makes trying to predict the future harder. \u201cThe recovery remains highly dependent on the evolution of the pandemic and the pace of vaccinations,\u201d the central bank said.<\/p>\n<p>The central bank will proceed slowly, but it can\u2019t deny the growing number of positives. The United States\u2019 economy will expand seven per cent this year and China\u2019s will grow an astounding 9.5 per cent, upwardly revised from five per cent and 8.4 per cent, respectively, according to the Bank of Canada\u2019s forecast.<\/p>\n<p>Outsized demand from the world\u2019s two economic superpowers has pushed commodity prices higher, and implies strong orders for the kinds of goods and services that Canada produces. Higher oil prices will push the value of the Canadian dollar higher, but the gains from trade will \u201csubstantially exceed\u201d the headwinds a stronger currency will create for some exporters, the Bank of Canada said in its latest quarterly report on the economy.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-4\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<figure class=\"embedded-image\"><picture class=\"embedded-image__ratio\"><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=564&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=1128&amp;type=webp 2x\" media=\"(min-width: 1200px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=564&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=1128&amp;type=jpg 2x\" media=\"(min-width: 1200px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/jpeg\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=472&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=944&amp;type=webp 2x\" media=\"(min-width: 768px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=472&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=944&amp;type=jpg 2x\" media=\"(min-width: 768px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/jpeg\"\/><source data-srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=288&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=576&amp;type=webp 2x\" media=\"(max-width: 767px)\" srcset=\"https:\/\/financialpost.com\/data:,https:\/\/financialpost.com\/1w\" type=\"image\/webp\"\/><img decoding=\"async\" alt=\"\" class=\"embedded-image__image lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=288\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=288,&#10;                https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/Bank-of-Canada-GDP-forecasts.png?quality=90&amp;strip=all&amp;w=576 2x\" height=\"802\" loading=\"lazy\" width=\"1000\"\/><\/picture><\/figure>\n<p>Early signs suggest that household spending will be strong, and the Bank of Canada foresees elevated levels of investment as companies retool for the digital economy. The other recovery engine is the housing market, which will contribute 1.9 percentage points to overall GDP growth this year, compared with an early estimate of 0.7 percentage points. Policy-makers said they think the stunning surge is mostly the result of a shift in demand for larger homes that will eventually be balanced out by increased supply. But they acknowledged that there\u2019s a risk of overheating.<\/p>\n<p>\u201cHousing construction and resales are at historic highs, driven by the desire for more living space, low mortgage rates, and limited supply,\u201d policy-makers said. \u201cThe bank will continue to monitor the potential risks associated with the rapid rise in house prices.\u201d<\/p>\n<p data-async=\"\"><em>\u2022 Email: kcarmichael@postmedia.com | Twitter: <a class=\"\u201ctwitter-follow-button\u201d\" data-evt=\"click\" data-evt-typ=\"User Interaction Click\" data-evt-val=\"{\" control_fields=\"\" source=\"\" type=\"\" name=\"\" target=\"\" url=\"\" vertical=\"\" position=\"\" pixels=\"\" link=\"\" href=\"https:\/\/twitter.com\/carmichaelkevin\" rel=\"noopener nofollow\">carmichaelkevin<\/a><\/em><\/p>\n<p data-async=\"\">Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. 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Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n<footer aria-label=\"Article Comments\" class=\"article-footer\">\n<section class=\"comments__section\" id=\"comments\">\n<h3 class=\"widget-title comments-anchor\" id=\"comments-area\">Comments<\/h3>\n<p class=\"comments__section-disclaimer\"> Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications\u2014you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. 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