Experts: Despite the good economic news, the problems are not over yet

Annual inflation has returned to its target rate of two percent, wage growth has outpaced inflation for 19 consecutive months, and the Bank of Canada has cut interest rates three times in a row.

The release of recent positive economic news led the Liberal government, long challenged by Canada's economic crisis, to celebrate in the House of Commons this week.

Nathan Janzen of RBC experts told Global News, there have been positive events recently that we should be happy about, but the focus on the inflation rate and the decrease in the interest rate has caused the economic pains that Canadians are facing to be ignored.

If inflation deviates from the central bank's two percent target, the central bank will raise interest rates in an effort to curb excessive price growth. Higher interest rates increase the cost of borrowing for Canadians and businesses. This discourages people from making large purchases and encourages them to save, thus reducing demand.

Also, the rapid growth of Canada's labor force has also brought the unemployment rate to 6.6%, which is unprecedented in the last seven years (except for the year of the pandemic).

Interest rates remain high and changes in interest rates can take between a year and 18 months to take full effect.

According to experts, until consumers and businesses regain their confidence, the economy will continue to grow moderately.

In the coming year, nearly a fifth of homeowners are set to renew their mortgages, and most will be renewing at higher rates than in the past or in the early years of the Covid-19 pandemic.

Economists have become increasingly confident in the downward course of the central bank's interest rate, but this path is still uncertain.

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