Bank of Canada (BoC)’s Governor Tiff Macklem acknowledged on Wednesday, 10 June ’26 that the Canadian economy is weak, adding that it was not clearly in recession. This was after the central bank sustained interest rates unchanged at 2.25%.
This is the 5th consecutive rate hold by BoC since it last cut borrowing rates 8 months ago in October ’25. It comes in the wake of a recent GDP report that hinted at a technical recession.
Macklem said that guided by the data we’ve witnessed to date, the economy’s weak, but he added that it’s not clearly in recession. He said so to reporters following the rate hold announcement.
Macklem went on to add that if one analyses how the economy has evolved over the last year, GDP’s roughly flat over the last 12 months. If one analyses the labour market, it has risen a little bit over the last 12 months. The index has been essentially flat over the last 6 months.
Macklem also said that there’s been a lot of volatility. When an analyst witnesses the bumps, the economy hasn’t really grown during the last year of ‘25. It hasn’t shrunk either.
Economists typically define a recession as two consecutive quarters of negative GDP. During the fourth quarter of 2025, yearly GDP dropped by 1%. During the first quarter of 2026, it declined by 0.1%, said Macklem.
He believed that the data points to clear ‘weakness’ but added that it isn’t a broad-based decline. The development could also mean that even though the data points to a technical recession, it’s not a situation where the economy’s experiencing widespread declines in many sectors. There are still key areas of the economy that are either stagnant or gradually improving.
The 1st quarter of ’26 was barely negative after the decline in the 4th quarter of ’25. If one looks across the industries, what one may see is that during the 1st quarter, more than 50% of the industries actually grew and expanded on a year-over-year basis. Furthermore, as previously mentioned, the unemployment rate has been relatively stable in the 6.5%-7% range.
