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OTTAWA, Dec 23 (Reuters) –

The Canadian economy grew by 0.1% in October and is expected to expand at the same pace in November, data showed on Friday, a sign that the full impact of seven consecutive interest rates hikes this year has yet to play out.

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October growth slowed compared with September’s 0.2% gain, which was an upward revision from a previously reported 0.1% increase, Statistics Canada said. October’s increase was in line with a median of analysts’ forecasts.

“The upward revision to September and modest growth in October leaves Q4 GDP tracking above the Bank of Canada’s… forecast,” said Andrew Grantham, senior economist at CIBC Capital Markets, in a note.

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The latest figures show that growth is “holding up perhaps a bit better than expected for Q4,” said Robert Kavcic, Senior Economist at BMO Capital Markets, in a note.

“The real question will be how things shake out during the first half of next year, when aggressive Bank of Canada rate hikes start to more fully work their way through the system,” Kavcic said.

The Bank of Canada has hiked rates at a record pace of 400 basis points in nine months to 4.25% – a level last seen in January 2008 – to fight inflation that is far above its 2% target.

Canada’s annual

inflation

rate eased to 6.8% in November, but was slightly higher than had been expected because of broad-based price pressures, according to data from earlier this week, leaving the door open for another rate

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increase

in January.

The bank has said it will be more

data-dependent

in setting the policy rate. Money markets see a greater-than-50% chance of a 25 basis point hike on Jan. 25.

In October, the services providers gained by 0.3%, led by gains in public sector, wholesale and client-facing industries, Statscan said.

Goods-producing industries posted a 0.7% decrease in October after four continuous months of growth, mainly due to a decrease in mining, quarrying, and oil and gas extraction and weakening in the manufacturing sector.

November’s preliminary estimate showing a 0.1% monthly increase in GDP was driven by gains in utilities and wholesale trade, Statscan said.

“While there are upside risks to our forecast that GDP will be unchanged this quarter, we continue to expect GDP to contract in early 2023,” Stephen Brown, senior Canada economist at Capital Economics, said in a note.

The Canadian dollar was trading nearly unchanged at 1.3645 to the greenback, or 73.29 U.S. cents. (Reporting by John Stonestreet)