“Actually, the most important statistic is the employment-to-population ratio, which is now down for five months in a row,” Rosenberg said. This trend signals an increasing slack in the labour market that could lead to slower wage growth. He anticipates that these developments will likely prompt the BoC to reduce interest rates soon, possibly in the spring.
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Meanwhile, Devlin criticized the BoC for potentially “overtightening by waiting too long” to lower interest rates. He argued that a quicker adjustment downwards was necessary but the central bank chose to prioritize its reputation for combating inflation instead.
Rosenberg also described the Canadian economy as “fundamentally weak,” suggesting that several indicators, including GDP per capita and real income per capita, imply that the country could already be in a recession. He lamented the BoC’s slow response to both raising and cutting rates.
“I think that the Canadian economy, you could argue, is already in a recession. There’s plenty of indicators… GDP per capita, real income per capita are telling you that, so I think it’s too late in both directions. The bank acted too slow to raise rates. They acted too slow to cut rates,” Rosenberg said.
