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Canada’s Housing Agency Sees Chance of a Recession as Rates Rise

The government group estimates that a rise in Canada’s benchmark rate to 3.5% could result in a 5% decline in average home prices.

Homes in the St. Andrew-Windfields neighbourhood of Toronto, Ontario, Canada, on Monday, Dec. 6, 2021. 

Homes in the St. Andrew-Windfields neighbourhood of Toronto, Ontario, Canada, on Monday, Dec. 6, 2021. 

Photographer: Cole Burston/Bloomberg
Updated on

Canada’s national housing agency sees a chance the country will enter a recession by the end of the year as the central bank hikes interest rates to control inflation.

If the Bank of Canada is forced to raise its benchmark interest rate as high as 3.5% to slow consumer price growth, the economy would be thrown into reverse for two straight quarters starting around the end of this year, a situation commonly referred to as a technical recession, according to a blog post by Bob Dugan, the Canada Mortgage and Housing Corp.’s chief economist.