David Rosenberg: Why the BoC will be forced into cutting rates sooner and to lower levels than most people think

News Snapshot:

There is considerable debate over where R-Star (the “neutral” real interest rate) is today in practically every country in the aftermath of the pandemic and all the policy responses and economic distortions that followed suit. And nowhere is this debate more acute than in Canada where the consensus on Bay Street and the Bank of Canada are leaning towards a view that there has been a structural shift higher. Our analysis runs contrary to the consensus. And this will be a prime reason why the Bank of Canada will be forced into rate-cutting mode sooner rather than later. It’s also...