Canada's positive growth and anticipated pick-up in 2016 likely to keep BoC on sidelines

Bank of Canada released the Financial Systems Review, which highlighted risks related to the Canadian economy and its financial system. It talked about the developments in the housing markets.

Some of the major strength in Ontario and B.C. are driven by the underlying fundamentals. The hottest markets can b prevented from crashing by the fairly balanced conditions, but the activity might be seen moving back consistently with long run averages, as there will be rise in the interest rates.

The foreign investment is certainly a drawback. While there is relatively less data on Canada's foreign purchases, they have picked up considerably in US as foreign investors waited for interests.

CMHC research suggests that Toronto and Vancouver have also benefited from some of these trends in 2015, although the degree and how fleeting this investment can be is still a big question market.

TD Economics estimates that real GDP growth in the fourth may come in at a very soft 0.9% annualized, below the Bank of Canada's view of 1.5%.  Nonetheless, positive growth in combination with an anticipated pick-up in 2016 will likely keep the central bank on the sidelines.