Canada’s challenge at capacity
Special to Okanagan Edge - Aug 29, 2018 - Biz Profiles

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Paul Ferley, assistant chief economist at RBC, will tell a Kelowna audience next month how red-hot economies on both sides of the 49th parallel can coexist in the time of Trump.

Ferley is scheduled to be keynote speaker during a noon-hour speech at the Urban Development Institute’s annual general meeting on Sept. 20.

The event is scheduled to begin at 11:30 a.m. at the Coast Capri Hotel. Tickets are $45 for members and $65 for non-members.

The title of the event is the “Canadian economy at capacity and confronting challenges.”

While Canada’s unemployment rate is matching lows not seen since the 1970s, that’s also putting pressure on the Bank of Canada to keep gradually tightening policy in order to keep growth moderate.

Ferley is to also discuss how rising rates can have negative implications for the real estate market with residential investment particularly vulnerable on the downside given current high levels of activity.

A key challenge for the Bank of Canada is to set policy to help sustain some growth but not at too strong a pace that generates inflationary pressures.

However, the U.S. economy is also operating at capacity, which is expected to keep the Federal Reserve tightening policies there.

And while President Donald Trump’s tax reductions are keeping the U.S. economy growing, it might be too strong for too long, putting more pressure on inflation and resulting in further aggressive Fed policy.

Such implies even greater upward pressure on mortgage rates and borrowing costs.

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