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Bank of Canada's Newly Found Economic Optimism Surprises Rosenberg Research

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Rosenberg Research was surprised by the Bank of Canada's notably more upbeat assessment of the country's economy in Wednesday's policy statement.

Canada's central bank kept its policy rate unchanged at 2.25% but upgraded its economic outlook, expressing greater confidence that a sustained recovery is taking place, said Rosenberg Research in a note Thursday.

Despite the stronger growth outlook, the shift doesn't indicate an imminent move toward tighter policy, according to Rosenberg.

The BoC continues to expect inflation to decline as growth improves, noting that "economic slack will be gradually absorbed" through 2028. With underlying inflation already near target, stronger growth alone is unlikely to justify rate hikes.

The central bank appears increasingly confident that the current period of economic weakness will transition into a sustained recovery, supported by tailwinds from the U.S. economy and more accommodative domestic financial conditions.

"We are skeptical," added Rosenberg.

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