Recession Bets Rise in Canada as Sticky Inflation Points to Higher Rates

Bank of Canada’s resumption of action after a five-month pause suggests that significant economic pain may be necessary to control stubborn inflation. Investors are now raising concerns about an impending hard landing for the economy. The central bank fears that the Canadian economy is overheating, making it challenging for inflation to return to its 2% target. Waiting to act could worsen inflation expectations and leave the economy vulnerable to higher borrowing costs, coinciding with the impact of recent rate hikes.