TD/ Canada Trust Economic Highlights – July 10/17

The Weekly Bottom Line Highlights of the Week – July 10

United States
• Global bond yields moved higher this week following cautiously hawkish statements by central bankers last week.
• Above-trend economic growth in advanced economies is expected to persist. But, inflation is expected to lag owing
to a number of structural factors working to suppress price growth.
• Altogether, model simulations of shocks to inflation and the unemployment rate supports the FOMC’s cautious
pace of monetary policy normalization. The last thing the Fed or other global central banks would want to do is to
have to reverse course several quarters from now, and risk impairing their credibility.

• The Bank of Canada will meet next week to decide on interest rates. A continuing trend of strong economic data
this week makes it likely that the Bank will announce an increase in the overnight rate, removing one of the two
emergency rate cuts it made in 2015 as cushion against falling oil prices.
• Despite strong economic growth, there is little urgency on the inflation front. Indeed, inflation has been moving
away from the Bank of Canada’s 2% target over the past several months. Given an inflation target that is intended
to be symmetric around 2.0%, a pause to confirm that inflation is indeed moving in the right direction, would not
be out of the question.

For further information, please contact:
John Maveety Manager, Residential Mortgages – Greater Ottawa Area TD Canada Trust
T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5446