Bank of Canada (BoC) governor Tiff Macklem doesn’t think the economy is in a recession. However, he does acknowledge some recent weakness. This weakness is something other economists argue may give the central bank more leeway to retain its key interest rate steady for the rest of this year.
The BoC’s rate decision arrived after days of debate over whether the country’s in a recession. A second consecutive economic contraction in the first quarter of the year triggered the BoC’s rate decision.
Macklem said on Wednesday, June 10, that the economy was weaker than expected during the first quarter as U.S. trade policy, besides the Iranian war, spurred geopolitical uncertainty.
When asked if he believed the economy was in a recession, Macklem responded that it does not yet warrant such a label. He reiterated the consensus among economists that the current downturn does not meet the criteria for a recession.
Macklem added that based on the data they had witnessed to date, the economy’s weak. However, it’s not clearly in recession.
In its April ’26 forecast, the BoC called for growth of 1.5% in the first quarter of the year. Macklem chalked much of the miss up to an unexpected pullback in government spending. He added that it can be choppy from one quarter to the next.
There has been some volatility in the economy besides the labour market over the past year; Macklem said the wider trend is flat growth instead of a pronounced decline. More than half of the Canadian industries were also growing in the first quarter of the year. He noted that the growth was despite the headline decline.
Macklem added that recent economic data, including a strong May employment report, signals that the economy may rebound during the second quarter of this year.
He also stated that so far, they had not seen a significant, broad-based decline in economic activity.
So, he opined that ‘recession’ isn’t the word he would use.
