A panel of Canadian financial experts also have divided opinions on the Canadian housing market's trajectory
With so many factors aligning, having certainty about anything isn’t easy these days.
For the Canadian economy – and the personal finances of Canadians – the only certainty seems to be that uncertainty will continue to shape the landscape for some time.
Interest rate hikes are one of the elements that most experts seem to agree on. They will continue higher with the Bank of Canada likely to announce increases through the rest of 2022.
An expert panel convened by Finder.com reveals that 78% of the experts believe another rate hike will happen in July and 61% expect a September increase.
Whether one or both of those will be 50 basis points is a matter for debate with some stating that the BoC should have been more cautious last week instead of opting for a ‘jumbo’ hike.
Recession ahead?
Asked about the chance that Canada will enter recession, the panel was split 50/50.
One half think there could be a recession within the next 18 months while the other half are not expecting one in the next 2 years.
“Odds…have risen but are not yet above 50%, as there remains time to slow growth and get inflation under control without an outright recession,” said Avery Shenfeld, CIBC’s chief economist.
Among those on the ‘recession is coming’ side, 17% say it will be in the second half of 2022, including Carl Gomez, chief economist and head of market analytics for CoStar Group.
“The leading indicators are pointing to a 30-40% chance of recession in the next six months,” warned Gomez. “A policy error with regards to increasing interest rates could possibly tip the economy into recession by then.”
Others calling for recession include 11% that say it will be in the first half of 2023 and 17% predicting it for the second half of 2023.
Housing market
How does the panel think the Canadian housing market will fare in the months ahead?
Despite higher interest rates and the cost of living, almost four in ten experts do not expect a correction (20% reduction from the peak) at all.
A quarter of the experts said that a correction is already underway while 6% sees it happening this summer, 13% said the last quarter of 2022, 6% forecasts it for the first quarter of 2023, 6% in spring of next year, and 6% said not until 2024.
The full report is at https://www.finder.com/ca/bank-of-canada-interest-rate-forecast
