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BMO Financial Group

December 29, 2010 09:55 ET

BMO's Doug Porter & Paul Taylor Announce Their Predictions for 2011

TORONTO, ONTARIO--(Marketwire - Dec. 29, 2010) - BMO Financial Group's top economists, market and commodity strategists in Canada give their predictions for 2011.

Douglas Porter, Deputy Chief Economist, BMO Capital Markets
  • Interest Rates Staying Put - In 2010, the Bank of Canada became one of the first major industrial world central banks to start raising interest rates in the aftermath of the crisis, taking its overnight rate up 75 basis points to 1.0 per cent in three stages over the summer. However, the combination of the Canadian dollar returning to par and the Fed's shift back to more Quantitative Easing put the Bank on ice in the fall, where it looks to stay until at least late spring of 2011.
  • From Stimulus To Restraint - We have recently nudged up our Canadian GDP growth outlook for next year to 2.7 per cent (from the low 2s), but would note that that is a bit below both this year's result and the U.S. forecast for next year. We will see fiscal policy shift from stimulus to restraint next year, at both the federal level and in many of the provinces.
  • Western Provinces Will Continue To Lead - On a regional basis, we see the three western-most provinces leading the growth parade with average growth of around 3.5 per cent, benefiting from the rebound in commodity prices, less reliance on the U.S. economy and their generally better fiscal position. In contrast, we look for Ontario to cool to a bit below the national average, after a quick rebound in 2010.
Paul Taylor, Chief Investment Officer, BMO Harris Private Banking
  • Signs of Recovery South Of The Border - There are clear signs that the U.S. economy is improving. U.S. economic growth will surpass the pace of 2010 -- the American economy will grow at a rate of close to 3.0 per cent in 2011 (a bit above its average pace of recent decades and probably just enough to begin to chip away at the unemployment rate).
  • Job Jobs Jobs - Full-time job creation in the United States will average slightly more than 150,000 per month -- enough to begin to bring the U.S. unemployment rate down closer to 9.0 per cent than the near 10.0 per cent it is currently at.
  • Bullish Markets - The S&P/TSX will trade above 14,000 in 2011.

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