TD/ Canada Trust Economic Highlights – March 21


United States

  • A dovish Fed gave support to financial markets this week. While leaving rates unchanged, the Fed’s state­ment noted the downside risks to growth from global economic and financial developments.
  • Just as important, the Fed’s dot projections moved the expected pace of rate hikes down significantly, with the median estimate falling 50 basis points to just 0.9% at the end of 2016, implying two rate hikes instead of four this year.
  • The Fed also moved down its estimate of the longer-run fed funds rate to 3.25% (from 3.5%) previously, helping to put downward pressure on long-term bond yields.


  • Data for this week was unambiguously positive, improving the outlook for near-term economic growth.
  • January retail sales rebounded from a sharp decline in December, spurred by strong new car sales. This boosts our outlook for household consumption in the first quarter.
  • Manufacturing shipments for January were robust, and volumes have now recovered from their 2015 slump.
  • We anticipate that next week’s budget will include revenue and expenditure estimates resulting in annual deficits of $30 billion in each of the next five years. Overall, we expect that the extra stimulus spending will add 0.1% and 0.3% to 2016 and 2017 growth respectively, and we will be finalizing these estimates in our quarterly economic forecast update next week.

For further information, please contact:
John Maveety Manager, Residential Mortgages – Greater Ottawa Area TD Canada Trust
T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5446
[email protected]