Last updated: October 20 2010
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The Bank of Canada made an abrupt announcement this week, declaring that the economic outlook for Canada has changed, requiring a reduction in targeted growth rates in 2011 and 2012 to 2.3 and 2.6 per cent respectively, while the overnight rate remained at 1%. The next scheduled date for the overnight target rate will be December 7.
These changes reflect a new phase in global economic recovery. Fiscal stimulus activities will shift to fiscal consolidation over the next several years. On the horizon are a weaker recovery in the US and other advanced economies, a slowing of growth rates in emerging economies and a "subdued profile for household spending" here at home. Notably, housing debt has become an important factor in a decreased capacity for consumer spending.
The good news, however is that demand is expected to shift towards business investment, and net exports, the strength of which will be affected by currency rates, and external demand.
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What is the impact on advice? Several year end strategies may be employed to plan into a moderate recovery cycle:
These and other strategies will be discussed in detail at the Distinguished Advisor Canada-wide Workshops starting November 3 to 9 brought to you by Knowledge Bureau and Dr. Tax.