These are the comments by CMHC about The Bank of Canada cuts back forecasts
The Bank of Canada made significant downward revisions to the outlook for Canadian growth and inflation in its semi-annualMonetary Policy Report. The Bank indicated that in the face of weaker U.S. and global growth, lower commodity prices and tighter credit conditions, Canada's growth forecast was being cut. The reduction was most marked for 2009 where the increase in GDP was slashed to 0.6% from 2.3%, although the Bank did not see Canada's economy falling into recession.
The downward revisions to growth and falling commodity prices saw the Bank significantly pare back their outlook for inflation next year.
Like the Fed, the Bank signalled that the greater risk to the Canadian economy is weaker growth rather than higher inflation and, like the Fed, left the door open to further cuts.
We expect the Bank to cut the overnight rate to 2% by year-end but to acknowledge that, if growth fails to meet the central bank's updated forecasts, more cuts are likely.