The Big Story Weekend listen: How to make sense of strong economic signals when all the pundits say the sky is falling?
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Jul 20, 2025 In this engaging discussion, Royce Mendes, Managing Director and Head of Macro Strategy at Desjardins, shares insights on navigating the turbulent Canadian economy. He elaborates on the unexpected resilience against tariffs and the surprising stability of interest rates. Mendes discusses the dual nature of job growth and challenges in the labor market, emphasizing implications for younger Canadians facing unemployment. He also explores the delicate balancing act of the Bank of Canada amidst fluctuating inflation and an evolving post-COVID landscape.
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Conflicting Economic Indicators
- June's employment reported 85,000 jobs added, suggesting a possible economic boost.
- Yet, lagging data signal stagnation and potential contraction, creating mixed economy signals.
Bank of Canada's Inflation Focus
- The Bank of Canada prioritizes inflation control above all, wary of inflation running too high.
- One-time tariff price hikes likely won't cause sustained inflation due to economic underperformance.
Selective Inflation Concerns Highlighted
- The Bank inconsistently treats one-time price shifts, ignoring carbon tax removal's effect but stressing tariff impact.
- This selective focus suggests they may fight past inflation rather than prepare for future shifts.