You may note that the usually more upbeat report (for the last few years the Bank of Canada has issued somewhat more positive views than what has actually occurred) is not particularly so this time around: basically discounting recent economic improvements as temporary and painting a fairly cloudy and uncertain view of the future.
Most of that has got to do with the lack of certainty of US policy initiatives, but also the tendency to view the rise of protectionist policies as potentially economically disturbing:
"An increase in protectionist policies could, depending on their degree and extent, have a significant impact on the Canadian and global economies. The rapid pace of trade liberalization from the late 1980's to the early 2000's helped increase global economic growth."
"A notable global shift toward increased trade protectionism would pose a risk not only to short-run demand but also to long-run growth and prosperity. A move to a significantly less-integrated global economy could also involve a lengthy adjustment process and could require difficult reallocation of workers and resources across industries."
Needless to say, under these conditions it is hardly likely that the BOC is going to be raising interest rates any time soon.
For our (High Rock) clients we have to considerall the risks (part of our diligence, deep research and discipline), which in some cases are not always obvious, especially when the "animal spirits" of optimism are forging ahead with emotion.
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