Here's where David Dodge thinks the economy and the central bank are heading next via financialpost
. The aggressive rate hike campaign came in response to decades-high inflation pressures, which reached an annualized pace of 6.9 per cent in October.
With excess demand, a strong labour market and a low unemployment rate , the authors of the outlook noted that the Canadian economy does not appear to be slowing down. This is partly because it takes months for higher interest rates to affect demand, through lost jobs, strained business revenues and stagnating output.
The one segment of the economy that has been rapidly reacting to rising rates has been housing, with prices in cities such as Toronto and Vancouver falling precipitously from their peaks. Dodge acknowledged that as rates rise, the first casualties will be the recent homebuyers who bought at the margins during the pandemic with high leverage.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
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