"Even with the current financial market backdrop, it will likely take a significant shock to get the BoC to move on policy, meaning this report should have little impact ".
-Benjamin Reitzes, BMO Capital Markets
The Canadian economy grew in line with expectations in April, as strength in manufacturing and utilities was tempered by a steep decline in nonconventional oil extraction.Canadian April's real GDP edged up 0.1% after contracting 0.2% and 0.1% in March and February, respectively, Statistics Canada reported. The freshly released figures matched analysts' expectations. Meanwhile, the economy grew 1.5% on an annual basis, slightly beating the market projection of 1.4%. Regardless, the modest gains met market expectations, economists warned that it was a temporary reprieve, as the impact of wildfires in Alberta weighed heavily on Q2.
Canada's monthly GDP figures were the last set of data released prior to the Bank of Canada's interest rate announcement in July. The main issue worrying economists are the effects of the Alberta wildfires on Q2 growth, as April's marginal recovery will not be enough to save Canada from an extremely weak Q2. However, economists remain confident that the BoC will stay the course and keep its monetary policy unchanged, arguing that a more shocking event is needed to trigger a change in the current 0.5% key interest rate.
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