EXCLUSIVE: RBC CEO expects 'modest recession' buoyed by strong consumer & liquidity
BNN Bloomberg
Royal Bank of Canada Chief Executive Officer Dave McKay said a modest recession is likely to occur in Canada, however that could be dampened by strong consumer demand and high levels of liquidity in the market.
McKay said in an exclusive interview with BNN Bloomberg Tuesday that an interest rate-induced “orderly slowing” is taking place in Canada’s economy. This slowing stems from the Bank of Canada’s rate hiking campaign to bring inflation down and bring about a soft landing, he said. As the potential end of the central bank's rate increases is expected to near, McKay believes inflation has peaked.
“All that to say we do expect a modest recession, supported by still strong latent demand by the consumer but also this enormous liquidity that we have in the marketplace. [There’s] $300-plus billion in cash sitting on balance sheets to absorb the shocks from higher rates,” McKay said, adding that it could support a quicker recovery.
“Higher rates will slow things down, but it should be a modest slowdown.”