Central banks ‘not sure’ where interest rates will ultimately land: Desjardins economist

Senior leaders within the Bank of Canada and U.S. Federal Reserve reiterated Thursday that their respective central banks are still figuring out where interest rates should ultimately land, but one economist says Canadians may not be able to handle high rates for much longer.

“You still have that soul-searching on neutral rates,” Desjardins VP and Chief Economist Jimmy Jean told BNN Bloomberg in a Thursday television interview.

“You have (Bank of Canada senior deputy governor) Carolyn Rogers reiterating prior hints that it may be higher than the 2.5 per cent midpoint they've been estimating.”

In a speech, Rogers warned that interest rates might not return to the low levels people were used to before the COVID-19 pandemic, saying that structural changes to the global economy could lead to higher neutral rates.