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Canada’s economy is in better shape than many analysts think and will require an interest-rate increase by the end of the year, according to Vanguard Group Inc., the world’s second-biggest money manager.

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New mortgage rules means homebuyers will have to save for longer or buy a cheaper house — and in many cities that will mean far fewer sales in 2017, warns CREA.





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Vanguard’s call bucks the consensus view that the Bank of Canada won’t raise its key interest rate from 0.5 per cent until the second quarter of 2018, according to 16 analysts surveyed by Bloomberg. Stephen Poloz, the central bank governor, delivers the bank’s next rate announcement with an assessment of the economy on Wednesday.

“Our contention has been and remains that the U.S. economy and the Canadian economy would remain resilient, even in the face of the ferocious commodity sell-off and even with the froth in the housing market,” said Joseph Davis, head of investment strategy and global chief economist at the Malvern, Pennsylvania-based firm. “I think the recent data toward the end of 2016 only bore that out.”