TD/ Canada Trust Economic Highlights – Dec. 22


United States

  • Markets were in risk-off mode early in the week, with attention firmly centered on Russia. A sharp decline in the rouble galvanized the central bank into raising its policy rate to 17%. The central bank also warned of a sharp contraction of the economy in 2015 should oil prices remain at $60/barrel.
  • Headline CPI decelerated to 1.3% Y/Y in November, while core CPI also nudged lower from 1.8% to 1.7%. Lower energy prices and a stronger dollar are weighing on price growth, offset by resilience in domestically-oriented services inflation.
  • On Wednesday, the FOMC statement expressed continued confidence in the state of the economy, but also patience in the path of future interest rate hikes. The fed left the words “considerable time” in the statement, but neutralized its impact by tying them to the October end of asset purchases.


  • Looking back at 2014, the collapse in oil prices in Q4 has eclipsed most economic events that came before it. Lower oil prices also cast a pall on our latest quarterly forecast released this week, which outlines the various impacts on Canada’s economy next year.
  • Our new Provincial Economic Forecast, elaborates on how lower oil prices will impact different, with oil-rich provinces set to feel the largest hit on incomes.
  • Fortunately, there are powerful offsets that are expected to cushion lower oil prices’ blow to the Canadian economy. For example, lower inflation pressures give the Bank of Canada ample room to keep interest rates at their current stimulative level until Q4 next year.

For further information, please contact:

John Maveety Manager, Residential Mortgages – Greater Ottawa Area
TD Canada TrustT: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5442