Rosenberg Research economist David Watt said Canada’s neutral rate may be about
50bps below the BOC’s current 2.25%–3.25% estimate. He cited population decline,
two decades of stagnant capital stock growth and persistent US trade-policy
uncertainty, and revised his neutral-rate range to roughly 1.75%–2.75%. Watt
said the BOC’s 2.25% policy rate may be too high and that hiking to counter
oil-driven inflation would be a mistake.
