David Dodge: Canada 'not going back' to pre-pandemic interest rates

Canada is not likely to return to interest rates between one and two per cent, according to a former Bank of Canada governor who also believes rate cuts will not come until late next year –at the earliest.

David Dodge, a senior advisor at Bennett Jones and former governor of the Bank of Canada, told BNN Bloomberg that Canadians should expect interest rates to “come down a bit” around the end of 2024 or early 2025.

But even when the central bank eventually lowers its benchmark rate from the current five per cent, Dodge said he thinks it will remain above levels seen in previous decades. He predicted rates will hover at around 3.5 per cent.

“We're not going back to the (around) two per cent interest rate at the Bank of Canada that we enjoyed in the 10 years leading up to COVID-19,” he said in a television interview. “And we’re certainly not going back to the one or one and a half per cent that we had as recently as 2021.”