Economy: Former Bank of Canada Governor predicts impending recession

Former Bank of Canada governor David Dodge told the Senate banking committee on Thursday that Canada faces an impending recession. According to him, Canada is moving towards a flatlined economic growth and increase in unemployment.

He said, “It’s not going to feel so good. Unemployment is going to rise and economic growth will flatten to zero.” He also said that the forecast by his successor were incorrect and were not very helpful.

Senator Clement Gignac (Que.), who was the chief economist for National Bank, criticized Bank of Canda executives for giving bad advice to Canadians. He said, “In 2020 the central banks, not only in Canada, said interest rates would remain low for a while. As a result a lot of people bought houses at variable rate mortgages. In 2020 the Bank of Canada said, ‘You know what? Inflation will be transitory.’ Whoops. They give us the impression that they know a lot of things, and we start to realize they have no better clue than Wall Street economists.”

David Dodge was Bank of Canada governor from 2001-2008. Economists from Desjardins Group and the Royal Bank of Canada are now joining the growing number of experts who are telling Canadians to brace for an incoming recession.

According to statement by BoC, “Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further.”