Notable Changes In BoC Statement [2/2]

Softer growth outlook with "substantial" decline in housing market activity

• Now: There is growing evidence that restrictive monetary policy is slowing activity, especially household spending. Consumption growth has moderated from the first half of 2022 and housing market activity has declined substantially. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. This overall slowdown in activity will allow supply to catch up with demand.
• From: While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Bank’s outlook that growth will essentially stall through the end of this year and the first half of next year.

Labour market one of the few areas that was as hawkish, if not more so, as December:

• Now: Labour markets are still tight: the unemployment rate is near historic lows and businesses are reporting ongoing difficulty finding workers.
• From: Canada’s labour market remains tight, with unemployment near historic lows.