Canada’s economy continues to face a tug-of-war between slowing growth and stubborn inflation, with the Bank of Canada opting to hold interest rates steady for the second consecutive time. According to economist, keynote speaker and author Todd Hirsch, the decision reflects a cautious approach as policymakers weigh conflicting signals in a fragile economic environment.
Todd Hirsch
Hirsch, a former Bank of Canada insider, noted that while a softening economy typically prompts rate cuts, inflationary pressures — and the potential for new tariffs — are keeping the central bank from pulling the trigger. While the current pause leaves borrowing costs unchanged, it doesn’t necessarily mean cheaper mortgages or loans. Hirsch explained that mortgage rates are more closely tied to the bond market, which has been trending upward, offsetting any potential relief from rate cuts.
The tariff situation adds another layer of volatility. Hirsch pointed to the latest unexpected tariff hikes from the U.S. on Canadian steel and aluminum, describing them as damaging and unpredictable. With the temporary 90-day reprieve set to expire at the end of June, businesses are bracing for more trade disruptions unless geopolitical distractions delay further tariff enforcement.
Meanwhile, on the fiscal side, the lack of a federal budget has sparked debate. Hirsch downplayed the impact on everyday Canadians, noting that most are more concerned about bills and groceries than political documents. However, he acknowledged that the absence of a budget raises valid questions about transparency and urgency, especially during uncertain times.
Addressing concerns about federal debt, Hirsch clarified that much of Canada’s borrowing is funded through bond markets — often by Canadian investors. While deficits matter, Canada still maintains strong creditworthiness, though Hirsch warned this can’t be taken for granted indefinitely.
Overall, economic caution continues to shape Canada’s monetary and fiscal path in a time marked by global instability and domestic political transition.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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