BoCs No. 2,  Lynn Patterson with 'Economic Progress Report: Sensible Shifts In Household Spending

BoC's dep' Governor,  Lynn Patterson, is crossing the wires now.

"I’m happy to be here to give you an update on the Canadian economy and discuss the decision we made yesterday to keep our key policy interest rate unchanged," ...

"This decision hinged on a number of factors. One was the slowing momentum in the global economy. It is increasingly clear that ongoing trade tensions and associated uncertainties are having an impact. I’m sure many of you here in Hamilton can relate to that as you deal with the steel tariffs."

"Another factor was the performance of the Canadian economy in the fourth quarter of 2018. While we had been anticipating a slowdown, coming primarily from the oil sector, it was sharper and more broad-based than expected. This is despite strong employment and labour income growth and core measures of inflation that have continued to hover near 2 per cent."

Key comments:

• Central bank still expects economic growth to pick up later in 2019, supported by strength in employment and rising wages.
• Repeats Canadian economy will be weaker in first half of 2019 than projected in January.
• Forecasts that easing in household spending will continue throughout 2019-2020.
• Quality of new borrowing has improved on new mortgage rules, fewer households taking out mortgages with debt-to-income ratio above 450 percent.
• Housing market remains in a state of adjustment and flux, with wide regional differences.
• Biggest negative surprise in housing data came from renovations as significant adjustments occur in housing markets.
• Sales of new cars softened in 2018, as did growth in spending on vacations, dinners and entertainment.
• Canadians managing higher carrying costs by scaling back spending, data suggests majority of households are managing debt levels.
• U.S. economy is moderating as expected, anticipate it will continue to slow to a pace closer to its potential.

Full speech delivered at Hamilton Chamber of Commerce, Hamilton, Ontario:

Economic Progress Report: Sensible Shifts in Household Spending

About Lynn Patterson 

Lynn Patterson was appointed Deputy Governor, effective May 2014. s a member of the Bank’s Governing Council, she shares responsibility for decisions with respect to monetary policy and financial system stability, and for setting the strategic direction of the Bank.