Canada's economy is proving surprisingly immune to higher interest rates

Canada’s economy hasn’t buckled under the weight of higher borrowing costs. On the contrary: strong growth has more economists predicting the central bank will resume raising interest rates soon.

Thirteen of 17 economists surveyed by Bloomberg say the Canadian economy is proving less sensitive to higher rates than previously believed. Almost half now say the Bank of Canada will raise its benchmark overnight rate, currently 4.5 per cent, between now and September. In the March survey, analysts unanimously said Governor Tiff Macklem’s next move would be a cut.

Going into this year, the consensus view was that Canada’s deeply indebted households would quickly cut back spending as they absorbed higher rates. That would in turn cause the economy to slow down earlier than other nations that aren’t so exposed to bloated home prices and mortgage debt.