Some good news this morning for businesses and households feeling the pinch of higher borrowing costs.
The Bank of Canada kept its target for the overnight rate at 5%, signalling that earlier efforts to cool inflation by slowing the economy are working.
Interest rates climbed faster than expected as inflation spiked after a series of global crises. The war in Ukraine, climate events in agricultural areas and disrupted supply chains have been cited for increasing input costs.
The central bank said today that it might still raise interest rates further, though some experts say the message is likely more bark than bite.
The Conference Board of Canada said that fears of a recession could become a "self-fulfilling prophecy."
The Bank of Canada’s recent Survey of Consumer Expectations found that 55% of respondents expect a recession is coming.
"It is likely these recession fears are encouraging households to scale back their spending, a finding backed by trends seen in our Index of Consumer Spending and Index of Consumer Confidence," the Conference Board said in its report. "This additional pull-back could give the final nudge to materialize a recession within Canada."