Monetary easing typically works with a lag. Thus, a faster-than-intended moderation in inflation could push Canada toward a recession. “Canada is not yet on the brink of recession, and government stimulus [in the form of rebate checks and tax holidays] should ensure a false dawn for growth before the year-end,” says Nick Rees, senior FX market analyst at Monex Canada. However, he adds that Trump tariffs and Ottawa’s clampdown on immigration could exacerbate a broader economic slowdown, making a recession “a very real possibility” in 2025.
