Volatile oil prices, the latest word from the Bank of Canada on interest rates and a report on economic growth at the end of last year will give investors plenty to chew over this week. The central bank is widely expected to keep its key interest rate unchanged at one per cent.
Economists have said that the central bank probably will not raise rates until the middle of the year, but governor Mark Carney's decision of exactly when has been made more difficult by the wild swings in oil prices.
"This turmoil that we have seen in North Africa and the spike in energy prices does introduce another element of risk to the global economy and specifically to the U.S. economy," said Doug Porter, deputy chief economist at BMO Capital Markets.
He said the task was much more straightforward for the central bank before the unrest in the Mideast because recent economic data has been so strong, including the trade balance moving into a strong surplus and a better than expected employment report for January.
"So the attention is going to turn to whether they drop any hints or start to sound a bit more upbeat and I think they will allow that the economic environment has improved a bit in the last couple of months. But I think overall they will sound quite cautious."
Meanwhile, investors are looking for some good news from Statistics Canada Monday when the agency reports on economic growth for December.
TD Economics forecast that gross domestic product is expected to show a solid (annualized) advance of three to 3.5 per cent in the final quarter of 2010, significantly stronger than the 2.3 per cent pace the bank expected in December. http://ca.finance.yahoo.com/
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