INSIDE STOREY O n e - o n - o n e w i t h i n d u st ry exp e r t s
Predicting the 2024 Economy Interest rates will fall, says CIBC expert—but when? By Ted McIntyre with Benjamin Tal, Deputy Chief Economist, CIBC
FROM PANDEMICS TO political flashpoints the world over, “it’s very difficult to predict the economy in this volatile environment,” admits CIBC Managing Director and Deputy Chief Economist Benjamin Tal. “The consensus a year ago was that inflation would peak at 4% and interest rates would go up to 3.5% to 4.5%. That was an underestimation.” Still, the highly sought-after Tal took time to gaze into his crystal ball and ohba.ca
@onhomebuilder
share his educated opinion with OHB last month. The news, however, is perhaps not as rosy as we’d hope.
OHB: So where do we stand now on the Canadian economy? BT: “It slowed under the weight of
high-interest rates—we’re expecting about 0.4% growth for the third quarter—but the U.S. GDP growth was, and remains, surprising, operating at about 4%. They are less affected
by higher interest rates because their mortgages are for 30 years and their level of debt isn’t as high as Canadians, so there’s no urgency to save. They’re still in a spending mode. But that will be the next shoe to drop. At some point, the U.S. will follow the example of the Canadian economy, and that’s when the 10-year rate will go down on both sides of the border.”
Why did it take so long for the higher interest rates to slow inflation?
“When the Bank of Canada was raising rates, we were spending our excess savings from the pandemic— sabotaging the monetary policy. So the Bank of Canada was impotent to deal with the situation because we were spending our savings. But now we feel the pain immediately.” 19 WINTER 2024 | ONTARIO HOME BUILDER
