What's Going On With Canada's Economy?

Americans complain about Joe Biden handling of the economy. Americans pay no attention to what happens elsewhere in the world. We overrate China. The Walrus provides a look at what is going on in Canada with Why the Bank of Canada Is Facing Intense Scrutiny:

In an April 2021 press release, the Bank of Canada noted that Canada’s economic rebound from the pandemic would be good, given the monetary policy support continuing amid the struggles of the third wave of lockdowns. While economic recovery remained, according to the bank, “highly dependent on the evolution of the pandemic and the pace of vaccinations,” it projected real GDP growth in Canada would be 6.5 percent that year—which is to say, very strong. Alongside that increase in overall economic activity, the bank predicted, as the GDP returned to normal, inflation would rise “temporarily” but it would return to 2 percent in the second half of 2022.

That’s not what happened. By June 2022, inflation was up to 8.1 percent. After raising the interest rate by half a percent that month, the bank raised it again, in July, this time by a full percentage point, to 2.5 percent. Meanwhile, inflation lingered in the range of about 6 to more than 7 percent for many months, through the end of 2022, and finally started to drop only in early 2023. But this past June, the bank raised the interest rate once more, to 4.75 percent. Inflation has gradually dropped—to 3.3 percent in July, about the same it had been in April 2021. It’s been a ride.

The U.S. rate in July 2023 was 3.2%. 

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