Resilient economy may muddle inflation fight, recession still expected: economists - BNN Bloomberg

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Canadian households and the overall economy have proven surprisingly resilient in the face of rising interest rates, said senior economists from the big banks, which could complicate the fight against inflation.

"There's no question that the economy had much more momentum at the end of last year than really anyone was expecting," said BMO chief economist Douglas Porter, speaking at an Economic Club of Canada panel Friday about the outlook for the year ahead.

"It's a worrisome thing in the sense that maybe it means you do have higher rates," said Perrault."The flip side of that is maybe this Holy Grail of a soft landing is no longer mythical, that we might actually engineer that." RBC chief economist Craig Wright said the bank is sticking to its forecast of a recession that it’s been predicting since last July, as a number of long-term tailwinds including free trade, cheap credit and low-cost labour, reverse.

"That's what's going to be the tougher nut to crack here. It was relatively easy getting inflation down from eight to six or as gasoline prices retreated, but it's that next step back down to two per cent that I think is going to be a little bit more of a challenge."

 

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Definitely they have to say to keep good sentiments in people’s mind because if something bad happens they are the first one will be in trouble as they give low interest mortgages and chances of default

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