Sports records are sometimes entered into the books with an asterisk, if changes in the rules, a juiced ball, or suspicions about performance-enhancing drugs leave one with reservations about the achievement. In that spirit, we’ve upgraded our outlook for Canada’s 2016-18 performance enough to add a second rate hike to our Bank of Canada call, but with an asterisk.
Much of the upgrade is in the rear-view mirror. Not only did 2016 Q4 top our forecast, but Q3 was revised higher. The fourth quarter also showed better income growth and a higher savings rate that leave room for near-term consumer spending. Along with January trade and February jobs data, that pointed to an upgrade to the current quarter.