Economy ends 2010 on high note
8:42 AM, E.T. | February 28, 2011Economy
Canada's economy roared back to life in the fourth quarter of 2010 after a disappointing third quarter, supporting expectations the Bank of Canada will resume interest rate hikes in the first half of this year.
Surging exports and strong consumer spending led to a 3.3-percent annualized rate of growth in the fourth quarter, up from 1.8 percent in the third quarter, Statistics Canada said on Monday. Statscan revised the third-quarter figure from 1.0 percent previously.
The performance beat market expectations of 3-percent growth and far exceeded the central bank's most recent forecast of 2.3 percent. The bank had made that projection in January but this month Governor Mark Carney said growth might well exceed that. Canada also beat U.S. growth, of 2.8 percent, in the quarter.
December gross domestic product grew by 0.5 percent from November, again exceeding market forecasts of 0.3 percent, and stronger than November's 0.4-percent growth.
The central bank increased borrowing costs three times between June and September last year and has kept them on hold at 1 percent since then. No one expects higher rates at its decision at 9 a.m. ET on Tuesday but markets have increasingly expected at least one hike by mid-year.