We can expect some key December inflation figures to be released tomorrow (Tuesday) in Canada.
JP Gervais, Farm Credit Canada’s chief economist, says the hope is that they could fall, potentially stalling the cycle of higher interest rates.
“We have a big, big, critical December inflation data release tomorrow in Canada. The hope is that this will drop slightly because then this would be a critical data point that would actually start, perhaps to stabilize the cycle of higher rates.”
There has been much debate about the idea of a recession.
Gervais says he doesn’t spend too much time thinking about whether we’re going to experience a recession, adding that it will be different than before.
“Inflation is so high that the bank (Bank of Canada) wants to avoid any kind of premature easing in interest rates. Even if the economy slips and falls a bit, I think interest rates will plateau.”
He believes we will ride the current wave of interest rates for most of 2023.
“We have no control over what is happening in the futures markets in relation to commodity prices. I mean, there’s a lot of value in being informed to make the right decisions, but the things we control are right on the farm. So let’s just spend some time not just out in the field but inside sharpening our pencils and saying, hey, there are any efficiencies I can actually pull out of the field
Overall, Gervais expects another small rate hike from the Bank of Canada this month.
Gervais will be speaking on “Inflation Navigation” as part of Manitoba Ag Days at the FCC Theater on Wednesday morning.
To hear more of Glenda-Lee’s discussion of interest rates with JP Gervais, click on the link below.
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