The Canadian economy posted blockbuster growth in May,
expanding 0.6 per cent on a monthly basis and 4.6 per cent year-over-year. This
was the seventh consecutive month of positive growth for the Canadian economy.
Moreover, growth was broad based with output increasing in 14 of 20 industrial
sectors. Given the first two months of GDP data, the Canadian economy is on
track to post a second consecutive quarter of growth close to 4 per cent.
Strong economic growth further solidifies the Bank of
Canada's case for raising interest rates one more time this year, likely at its
October meeting. However, the path of interest rates beyond that rests heavily
on the evolution of Canadian inflation, which has been trending well below the
Bank's 2 per cent target.