Bank of Canada Governor Tiff Macklem said Canada’s economy is weak but not clearly in a recession during a policy announcement in Ottawa [1, 2, 3].
The assessment comes as the central bank navigates a period of stagnant growth, influencing future interest rate decisions and national economic expectations.
Macklem said that the economy has not experienced a broad-based decline, which is a key characteristic of a formal recession. He said that while the economy is weak, it is not contracting enough to justify the term [1, 2].
"Recession is not the word I would use," Macklem said [2].
According to the governor, the economic data shows a pattern of stagnation rather than a sharp drop. He said that when looking through the bumps, the economy has not really grown in the last year, but it has not shrunk either [1].
As part of the policy announcement, the Bank of Canada held its benchmark interest rate steady at 2.25 percent [3]. This decision reflects the bank's attempt to balance the risks of inflation against a fragile growth environment.
"The economy is weak, but it is not clearly in recession," Macklem said [3].
The governor's comments suggest that while the Canadian economy is struggling to find momentum, it has avoided the systemic collapse associated with a traditional economic downturn, a distinction that may guide the bank's approach to monetary policy in the coming months.
“"Recession is not the word I would use."”
By distinguishing between a 'weak' economy and a 'recession,' the Bank of Canada is signaling that while growth is stagnant, there is no systemic collapse. Maintaining the benchmark rate at 2.25 percent suggests a cautious approach, attempting to stabilize the economy without triggering a deeper contraction or reigniting inflation.
