Not a Painful Recession, but a Painfully Slow Recovery

The year 2023 has witnessed turbulence in the banking sector, dashed expectations for a reopening-driven economic surge in China, and only marginal improvements in underlying inflation across several countries.

In this complex environment, one constant factor continues to influence our assumptions: high interest rates will continue to impact the global economy. This holds true for the US, where the pool of excess savings sustaining consumer spending is nearly exhausted.

The tide appears to be turning swiftly for the Canadian economy. We have now entered the period of peak tightening effects, having crossed the 18th month since the tightening cycle began.

By next March, we anticipate the Bank of Canada will deem the supply-demand rebalancing process well entrenched enough to warrant some monetary policy relief.