Canada's Q1 Growth Outperforms, Increases Odds For Rate Hike

• Canada's economy expanded faster than expected in the first quarter and likely accelerated further in April, data showed on Wednesday, increasing the odds for another interest rate hike by the central bank.
• The economy expanded at an annualized rate of 3.1% in the first three months of the year, Statistics Canada said, exceeding both analysts' and the central bank's expectations. Real GDP was unchanged in March from February, better than a forecasted 0.1% decline, and likely rose 0.2% in April, the agency said.
• The next policy announcement is due on June 7. Money markets are pricing in a 40% chance of a hike next week, up from 28% before the data, and they fully expect an increase of 25 basis points by September.
• The economy benefited from favourable international trade and growth in household spending in the quarter that ended March, while slower inventory accumulation, as well as a decline in housing investment, were among moderating factors, Statscan said. Canadian households spent more on new trucks, vans and sport utility vehicles and semi-durables like garments in the quarter, while spending on nondurable goods declined slightly.

(Source: Reuters)