Royal Bank of Canada (RY) is forecasting a moderate recession in Canada this year.
Canada’s largest commercial bank said it expects a soft landing for the Canadian economy as the central bank pauses interest rate hikes amid signs that growth is slowing nationwide.
The views from Royal Bank come after the Bank of Canada raised its trendsetting overnight interest rate to a 15-year high in January but signalled that it now plans to hold off on further rate hikes as it assesses their impacts.
Royal Bank said any recession in Canada this year is likely to be short lived and that economic growth is likely to quickly rebound with the central bank now prepared to bring its monetary policy tightening to an end.
A recession is generally defined as two consecutive quarters of economic contraction.
Earlier this week, Statistics Canada reported that the Canadian economy grew an annualized 0.2% in the fourth and final quarter of 2022. Canada’s economy has expanded for six consecutive quarters.
Also this week, the Conference Board of Canada said that it expects the provinces to avoid a recession this year though growth will likely be slower than in 2022.
Royal Bank’s stock is down 2% over the past year and trading at $136.21 per share
