He expects both to snap back in the second half of the year from their first-half slump, which puts him in the same relatively optimistic camp as the Bank of Canada. Patti Croft, chief economist at Sceptre Investment Counsel Inc., thinks that view is too sanguine. We're seeing higher office vacancy rates, an increase in layoff announcements, higher unemployment claims. If the U.S. economy continues to weaken in the weeks ahead, thus putting at risk the prospect of a second-half rebound, Ms. Croft said the Fed is likely to reduce its key funds rate by another full percentage point, with the Bank of Canada following with reductions totalling 0.75 points. Avery Shenfeld, senior economist at CIBC World Markets Inc., is also skeptical of the second-half recovery scenario.
People tend to assume the economy is linear, that once it picks up again, it keeps going.
By June, both the Fed and the Bank of Canada will have cut rates by another 0.75 points, he added. Somewhere in the middle are forecasters such as Lloyd Atkinson, chief investment officer at Perigee Investment Counsel Inc., who sees cuts of 0.5 points on the horizon in both countries. The Globe and Mail . Republished with permission. All Rights Reserved.