Bank of Canada Governor Tiff Macklem admitted Wednesday that Canada may already be in a recession, marking a sharp reversal from his earlier forecasts that dismissed the possibility.“What we are going through is not just a cyclical downturn,” Macklem told reporters after releasing the Bank’s latest Monetary Policy Report. “Part of it is structural. The U.S. has swerved towards protectionism. It is harder to do business with the United States. That has destroyed some of the capacity in this country and is adding costs.”Macklem said the result will be a lower standard of living for Canadians unless major changes are made. “Unless we change some other things, our standard of living as a country is going to be lower than it otherwise would have been,” he said. “Our incomes will be lower than they otherwise would be.”Blacklock's Reporter said the bank cut its key interest rate by a quarter point to 2.25%, the fourth cut this year. .The new report warned the ongoing trade conflict with the United States “is fundamentally reshaping Canada’s economy and will have a lasting negative impact on economic activity.”Asked whether Canada will avoid a recession this year, Macklem replied that growth is expected to remain “pretty close to zero.” He added, “When you are forecasting a small positive, you can’t rule out that there could be a small negative. So yes, we could get two negative quarters.”The bank’s new projections show growth averaging just 0.75% this fall and no better than 1.4% through 2027 — a steep downgrade from previous estimates. .“Growth is very weak in the near term because of exports and business spending,” Macklem said. “You start to see growth pick up next year and in 2027 as exports and business spending start to recover.”He said U.S. tariffs have now been in place for more than six months, and their effects are “becoming clearer.” “The entire path for Gross Domestic Product is lower than it was before the shift in U.S. trade policy,” said Macklem. “By the end of 2026, the level of GDP is about 1.5% lower than forecast.”Senior deputy governor Carolyn Rogers said Canadians should not be surprised by the grim outlook. When asked what message she had for struggling workers and businesses, Rogers replied, “They don’t need us to tell them things are tough out there.”The bank’s next rate announcement is scheduled for December 10.
