Paul Beaudry, a former deputy governor at the Bank of Canada, says there’s a 70% chance that the economy will slow without tipping into a recession over the next year.
Beaudry said that the Bank of Canada’s aggressive interest rate hikes have effectively slowed the economy, making a so called “soft landing” possible though not guaranteed.
“I would only say there's a 60% to 70% chance of a soft landing, but there’s still 30% of it going the other way,” said Beaudry in a media interview. He left Canada’s central bank in July of this year.
Canada’s annualized inflation rate rose 4% in August from a year earlier mainly due to rising oil and natural gas prices.
Beaudry said that persistently high inflation could require the Bank of Canada to further raise interest rates in coming months.
In addition to higher gasoline prices, Canadians are also struggling with higher interest rates charged on home mortgages, which have pushed up monthly payments.
Beaudry concluded that it will take time for previous interest rate hikes to work their way through Canada’s economy.
