30 September 2010 18:20 [Source: ICIS news]
Toronto-based CIBC bank said it expected
However, despite the softer growth outlook, the government should stick with its plans for fiscal tightening, at least for the time being, said CIBC chief economist Avery Shenfeld.
“Only if the Bank of Canada [the country's central bank] were forced to take rates back to zero would it be appropriate to postpone a much-needed, if gradual, path back to fiscal rectitude," he said.
“At this point,
Canada had started raising interest rates, presumably to prevent growth from being so brisk that inflation broke out, and as such it made no sense “to be stepping on the monetary policy brake” while at the same time providing fiscal stimulus, he said.
CIBC’s forecast came as federal statistics agency Statistics Canada said that the country’s GDP fell 0.1% in July from June - the first decline in 11 months.
Manufacturing, retail and wholesale, and construction and forestry all posted decreases.
But like CIBC, Alexander said even though growth would be slower, new fiscal stimulus packages were not needed.
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