(Bloomberg) -- Investors are hunting for clues Wednesday on whether Bank of Canada Governor Stephen Poloz is swayed by recent signs of economic weakness or sticks with his desire to boost interest rates back to neutral.
While his one-page decision is expected to keep borrowing costs unchanged, here is a sampling of data that highlight some of the headwinds facing Canada’s economy:
Citi’s Economic Surprise Index, which tracks the difference between market expectations for data and their actual s, has been trending at the lowest level since last summer and has been below zero since mid October -- around the time of the Bank of Canada’s last monetary policy report. That constant stream of disappointing numbers could give pause to central bankers that refer to themselves as data dependent.
The Macdonald Laurier Institute’s Leading Indicator fell 0.1 percent in October. The composite gauge’s first decline since January 2016 was largely driven by pullback in S&P/TSX Composite Index, which fell 6.5 percent on the month, as well as marked declines in commodity prices.
One consequence of moving from consumption-led growth is finding other sources of strength. The central bank has cited investment as a likely candidate, but recent data show spending on non-residential buildings, machinery and equipment fell for the first time in seven quarters between July and September and remains well below a peak set four years ago.
Interest-rate hawks can’t go on about inflation pressures with gasoline prices tumbling by about 25 Canadian cents back toward a dollar a liter since October. While policy makers said they were looking through some short-term price gains earlier this year, if inflation slips back to 2 percent before the bank’s January meeting the need for rate hike signals may fade too.
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