BoC: Facing domestic troubles – ING

According to analysts at ING, the fact that the phase one deal between the US and China is soon to be signed appears supportive of ongoing stability in monetary policy.

Key Quotes

“Certainly wage growth is robust and unemployment is fairly low, but we sense there are cracks forming. Recent data has shown that GDP rose just an annualised 1.3% in 3Q 2019 and actually fell in October. Retail sales figures have been subdued despite strong pay gains and even housing activity has shown evidence of slowing; building permits have fallen in six of the past ten months.”

“Given this backdrop we expect payrolls growth to continue its softening trend and with unemployment closer to 6% rather than the 3%-4% handle comparable economies have, we believe that wage growth will slow further. This doesn’t alter the outlook for stable policy at the 22 January Bank of Canada policy meeting, but it leaves the possibility of action open for subsequent meetings.”