I’m sure you heard them too: the murmurs that an extended run of poor-to-terrible economic data could force the Bank of Canada to cut interest rates. They started August 5 after Statistics Canada reported that employment plunged in July and that the trade deficit widened to a record $3.8 billion in June.
These numbers unnerved members of commentariat. “If exports are going to lead this recovery, it might be the best prescription to kick open the stubbornly sticky door to the critical U.S. market,” David Parkison wrote in a column for Globe and Mail subscribers. Parkinson’s battering ram of choice would be an interest-rate cut, which he reckons would weaken the currency, thus making our stuff cheaper than that being hawked by competitors from Mexico, South Korea, Germany and elsewhere. “Without something to open that door, Canada may soon justify a rate cut anyway,” Parkinson concluded.
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