The world’s central banks have “largely won” their inflation fight, according to Mackenzie Investment’s 2025 forecast. Here at home though, the Bank of Canada can’t afford to take its foot off the overnight rate gas pedal just yet.<\/p>\n
“The Bank of Canada is faced with a different deck of cards,” in comparison to the U.S. Federal Reserve, said Lesley Marks, chief investment officer at Mackenzie Investments, in an interview with Investment Executive<\/em>. “The Canadian economy has been on a slowing trend since the middle of last year.”<\/p>\n Marks said that in comparison to the U.S., Canada was harder hit by the post-pandemic rise in interest rates. So, despite achieving its inflation target, there’s more work for the central bank to do in the new year. Watch for the Bank of Canada to go its own way in 2025, Marks suggested.<\/p>\n “They will have an independent path for cutting rates,” she said. “Presumably, cuts in immigration will factor into that as well. … In the face of a flat or slightly shrinking population, it is going to be very difficult for Canada to experience economic growth.”<\/p>\n Mackenzie is not forecasting a Canadian recession in the new year. Marks said that an additional round of inflation is possible though, given U.S. president-elect Donald Trump’s threat to impose a 25% tariff<\/a> on Canadian goods. “It’s a realistic expectation that inflation could start to move higher, both in the U.S. and Canada,” she said. “That will factor into the Bank of Canada’s decision making, and perhaps make it more difficult to act … to support the Canadian economy.”<\/p>\n Should rate cuts continue, the loonie will take a hit. “We think that the new trading range may be in the 69- to 72-cent range,” Marks said.<\/p>\n