For A Lot Of Canadians, There's A Lot That's Still A Lot Of Pain To Get Through

24th September 2023

Most of the world is suffering from inflationary pressures. Canada is rich country but it also has seen interest rates rises as i UK, USA and Europe.

A CBC Article published today highlights the Canadian economic position. She is talking about the Canadian position but it very closely resembles the UK position so if you have not yet understood what is happening with interest rates and inflation this explanation very clearly sets out the position.

The Canadian economy is headed for a rough patch. Growth has already slowed considerably. Job growth has moderated. Inflation remains stubbornly high. But the pain households are feeling today is only going to get worse.

"The path forward looks bleak," Tiago Figueiredo, a macro strategy associate with Desjardins, said in a note.

For a while there, the economy proved more resilient than expected. The Bank of Canada's interest rate hikes piled up one after another. Even so, the jobs market boomed, GDP continued to expand.

But economic pain was inevitable. Soaring inflation has eroded purchasing power, and climbing interest rates have clobbered households. Now, cracks have begun to appear in the data, and economists expect those cracks to grow. GDP contracted in the second quarter of this year.

Next week, new data are expected to show economic growth flat-lined in July and perhaps contracted again in August. Some of that can be chalked up to specific factors, such as the port strike including labour actions like the port strike in B.C. or wildfires.

But before any of that, momentum was clearing being sapped out of the Canadian economy.

In a speech this week, Bank of Canada deputy governor Sharon Kozicki highlighted the dilemma the central bank is facing. See video.

Read the full article HERE