We have begun the journey towards lower interest rates with the Bank of Canada’s move to trim one-quarter of a point off its benchmark overnight rate. That decision has already triggered a reduction in prime rates offered by the major banks.
The trek to lower interest rates will no doubt take longer than the trip that took them higher as central bankers around the world scrambled to contain inflation following the COVID public sector spending spree.
And it comes at a time when Canada’s economy is facing significant head winds.
A new report by RBC Royal Bank’s economic unit offers a summary of how things in this country have unravelled. We are still invited to the G7 meetings – the seven biggest economies in the world – but we rank 18th most productive.
The buying power of the average person is dropping as our low productivity means wages have fallen $20,000 a year behind our U.S. counterparts and it is even worse for our capital accumulation such as pension plans as we rank on a par with Alabama, not the technology-rich states of New York and California.
