UPDATE 2-Cheap oil may temper cheer over strong Canada Q3 GDP
(New with implications for Bank of Canada)
By Randall Palmer
OTTAWA Nov 28 (Reuters) - Canada's economy grew faster than expected in the third quarter, according to data on Friday, but cheaper oil prices add to the likelihood the Bank of Canada will not consider higher interest rates anytime soon despite the recent run of strong figures.
At 2.8 percent, third quarter growth eclipsed a 2.1 percent market forecast and the Bank of Canada's 2.3 percent estimate, following 3.6 percent in the second quarter.
Bank of Montreal chief economist Doug Porter said the string of strong data on jobs, auto sales, home sales, and inflation put the economy in "a very good place heading into the energy price storm".
"Does it get any better than this? Sadly, probably not. Even with this nice run, we suspect the Bank of Canada will be completely unmoved because of one word - oil," he wrote to clients, noting the pending impact on government revenues, consumer prices and growth from weak oil prices.
Brent crude oil steadied above $73 a barrel on Friday after hitting a fresh four-year low in the wake of OPEC's decision not to cut output, a move investors said would leave oil markets heavily oversupplied.
The Bank of Canada is forecast to keep interest rates on hold next Wednesday and focus will be on how Governor Stephen Poloz interprets the recent data.
Canada's growth in real gross domestic product fell short of the 3.9 percent in the United States for the quarter, but U.S. strength spilled over the border, as Canadian goods exports rose by an annualized 9 percent. Continued...