To get a sense of whether Bank of Canada Governor Mark Carney is likely to move interest rates any time soon, consider the inflation numbers due out this Thursday.
Here's why.
In his last quarterly forecast, the central bank chief said companies are still muddling through plenty of excess capacity - or "slack." The economy won't be running at full tilt until the third quarter of 2011, Mr. Carney said, mostly because the loonie is expected to stay around 96 cents (U.S.), squeezing exports to the United States.
As a result, he said, inflation will likely stay below the bank's 2-per-cent target. And Mr. Carney has repeatedly maintained that unless the outlook for prices shifts, his rock-bottom interest rates are staying put through at least July.
Economists predict the consumer price index report for January that Statistics Canada publishes late this week will again show an inflation rate below 2 per cent.
Still, for anyone tempted to overlook how rigidly the Bank of Canada's interest-rate moves are tied to forecasts for inflation, the rest of the week's data could be misleading.
Tomorrow, Statscan reports manufacturing sales for December, and the Canadian Real Estate Association publishes home resale data for January.
Three days later Statscan releases December retail sales numbers.
Most economists estimate factory shipments had a gain of about 2 per cent in December after barely any growth in the previous month.
Even though that would be the sixth gain in seven months, much of the gain was linked to what may be a very temporary turnaround for the beleaguered auto industry and wouldn't necessarily mean enough slack has been absorbed to alter Mr. Carney's timeline.
The strong loonie, combined with the widely held view that the U.S. economy's 5.7-per-cent growth rate in the fourth quarter isn't sustainable, mean Canada's factory sector will be "relatively weak" in the months ahead, TD Securities' Millan Mulraine wrote in a note to clients.
Similarly, while a buying spree in the home resale market that has pushed prices higher and higher for the past few months likely continued in January, total inflation has stayed in check.
"The only inflation we're seeing is in the housing market, and that filters into the overall measure but with very long lags and not with a terribly high weighting," Sal Guatieri, an economist at BMO Nesbitt Burns, said in an interview. "We will see CPI drift up because of the runup in house prices, but for now that impact is generally being offset by declines in prices for other goods and services or very modest increases."
Indeed, Mr. Guatieri said, even as retail sales data on Friday will probably show Canadians ramped up borrowing and spending in December, the loonie is holding import prices down and, regardless, the stubborn slack - not to mention a jobless rate that's falling but still more than 8 per cent - has made retailers skittish about raising prices.
"We're not looking at a terribly strong recovery this year," Mr. Guatieri said. "As a result inflation will remain subdued, unemployment will come down only slowly and, as a result, the Bank of Canada is in no rush to raise interest rates."