The Canadian economy grew by 0.1% in October and is expected to expand at the same pace in November, data showed on Friday, a sign that the full impact of seven consecutive interest rates hikes this year has yet to play out.
October growth slowed compared with September’s 0.2% gain, which was an upward revision from a previously reported 0.1% increase, Statistics Canada said. October’s increase was in line with a median of analysts’ forecasts.
“The upward revision to September and modest growth in October leaves Q4 GDP tracking above the Bank of Canada’s… forecast,” said Andrew Grantham, senior economist at CIBC Capital Markets, in a note.
The latest figures show that growth is “holding up perhaps a bit better than expected for Q4,” said Robert Kavcic, Senior Economist at BMO Capital Markets, in a note.
“The real question will be how things shake out during the first half of next year, when aggressive Bank of Canada rate hikes start to more fully work their way through the system,” Kavcic said.
The Bank of Canada has hiked rates at a record pace of 400 basis points in nine months to 4.25% – a level last seen in January 2008 – to fight inflation that is far above its 2% target.