‘Recession is not the word I would use’: Bank of Canada governor

ByRachel Aiello
and

Spencer Van Dyk

Updated: June 10, 2026 

Bank of Canada Governor Tiff Macklem. (The Canadian Press)

Amid weeks of debate in the House of Commons on Canada slipping into a technical recession, Bank of Canada governor Tiff Macklem says that based on the data he’s seen to date, this country’s economy is weak, but “it is not clearly in recession.”

“There’s been a lot of volatility, month to month, quarter to quarter, but when you look through the bumps, I mean the economy hasn’t really grown in the last year, but it hasn’t shrunk either,” Macklem said Wednesday following his interest rate announcement, when asked if he believes Canada is in a recession.

Canada’s economy saw a contraction of GDP on an annualized basis in the last two quarters — by 0.2 per cent in the end of 2025 and by 0.1 per cent in the beginning of 2026 — meeting the definition of a technical recession.Is Canada’s economy in trouble? What the latest GDP and job numbers mean for you

Macklem noted, however, that while economists typically define a recession as “a significant broad-based decline in economic activity that lasts for more than one quarter,” what is happening in Canada currently doesn’t meet that threshold, in his estimation.

“The first quarter was just barely negative after the decline in the fourth quarter last year,” he said. “If you look across industries, what you see is that, in the first quarter, more than half of industries actually grew, expanded on a year-over-year basis.”

“And as I mentioned, the unemployment rate has been relatively stable in the six-and-a-half to seven per cent range,” he also said. “So far, we have not seen a significant broad-based decline in economic activity.”

Partly contributing to the GDP contraction is that while oil exports are up, other exports, such as cars and trucks, are down, with the auto sector being one of many that is heavily reliant on the United States.

Doubling down, the central banker explicitly stated that “recession is not the word (he) would use,” while noting the Bank of Canada continues to assess all factors and is “prepared to respond as needed.”

Bank of Canada senior deputy governor Carolyn Rogers has also warned not to put too much weight on the technical recession definition, but the issue has dominated debate in the House of Commons

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Conservative leader Pierre Poilievre rises in the House of Commons in Ottawa, Tuesday, April 14, 2026. THE CANADIAN PRESS/Adrian Wyld

Issue dominating political debate

The governing Liberals have downplayed the data, pointing to a stellar jobs report Friday, as the Opposition Conservatives continue to press on the issue.House Speaker denies Poilievre’s request for emergency debate on Canada’s economy

“There’s nothing technical about coming home from work and telling your kids that you no longer have a job and that you’re going to have to sell the house because Canada has the second highest unemployment in the G7,” Conservative Leader Pierre Poilievre said in the House of Commons two weeks ago. “That is not technical, it is real. This is a full-blown Liberal recession.”


In response, Finance Minister François-Philippe Champagne pointed to the Liberals’ “generational investment in infrastructure, in housing, in productivity and innovation,” and said the federal government is supporting Canadians with affordability measures.

Despite Macklem’s declaration, Poilievre continued to criticize the government in question period Wednesday for what he’s been calling a “Liberal recession,” and seizing on the Bank of Canada governor’s use of the word “weak” to describe the economy.

“That translates into lost jobs, lost homes, and bigger lineups at food banks,” Poilievre said. “Will the prime minister stand today, reverse the Liberal policies that caused this recession?”

Energy and Natural Resources Minister Tim Hodgson, meanwhile, accused Poilievre of “cherry picking” his points by leaving out Macklem’s assessment that Canada is not in a recession.


Rachel Aiello
National Correspondent, CTV News

Spencer Van Dyk
Writer & Producer, Ottawa News Bureau, CTV News

Bank of Canada holds key rate steady in fifth consecutive decision

By

The Canadian Press

Opens in new window

Published: June 10, 2026 

Bank of Canada governor Tiff Macklem doesn’t think the economy is in a recession, but he does acknowledge some recent weakness -- something other economists argue should give the central bank more leeway to keep its key interest rate steady for the rest of the year.

The central bank’s policy rate remains at 2.25 per cent Wednesday after the central bank’s fifth consecutive hold, a move that was widely expected by economists.

The Bank of Canada’s rate decision arrived after days of debate over whether the country is in a recession, triggered by a second straight economic contraction in the first quarter of the year.

Macklem said Wednesday that the economy was weaker than expected in the first quarter as U.S. trade policy and the war in Iran spur geopolitical uncertainty.

Asked whether he thought the economy was in a recession, Macklem said that label isn’t yet warranted -- echoing the chorus of economists who argue the current downturn fails to meet that bar.

“Based on the data we’ve seen to date, the economy is weak, but it is not clearly in recession,” Macklem said.

In its April forecast, the Bank of Canada called for growth of 1.5 per cent in the first quarter of the year. Macklem chalked much of that miss up to an unexpected pullback in government spending, which he said can be choppy from one quarter to the next.

While there’s been some volatility in the economy and labour market over the past year, Macklem said the wider trend is of flat growth, not a pronounced decline. More than half of Canadian industries were also growing in the first quarter of the year despite the marginal headline decline, he noted.

Recent economic data, including a strong May jobs report, signals the economy could rebound in the second quarter of the year, Macklem said.

“So far, we have not seen a significant, broad-based decline in economic activity,” he said.

“Recession is not the word I would use.”

Macklem highlighted that the upcoming review of the Canada-U.S.-Mexico agreement, or CUSMA, comes with significant risks for the economy. An outcome that sees current tariff levels ratchet up, or that sees uncertainty persist into the second half of the year, would hamper Canada’s economic recovery.

Michael Davenport, senior economist at Oxford Economics, said he believes Macklem has the right interpretation of recent data, including sharp risks around the upcoming CUSMA renewal.

“The Canadian economy is definitely a little bit weaker than we had thought, say, a couple of months ago, but we don’t think that the Canadian economy’s currently in a recession,” Davenport said.

Global oil prices -- driven higher by the Middle East conflict -- are meanwhile staying higher than first thought in the Bank of Canada’s April forecast. Opposing pressures on prices and economic growth put the central bank in a dilemma, Macklem said.

“Raising rates to dampen inflation could further slow the economy. Easing rates to support growth increases the risk that higher inflation becomes persistent,” he said.

“For now, holding the policy rate unchanged balances those risks.”

Annual inflation rose to 2.8 per cent in April, in part because of the global energy shock. The Bank of Canada now expects inflation to hold around three per cent in the coming months before easing back toward the central bank’s two per cent target.

Macklem said there has so far been “limited evidence” that higher energy prices are passing through into broader inflationary pressures.

He said the Bank of Canada will keep looking through the short-term rise in inflation tied to the oil price shock. He also reiterated the central bank will act to prevent price pressures from becoming entrenched.

Core inflation -- a group of metrics the Bank of Canada uses to track underlying price trends -- has cooled in recent months despite the rising headline rate. Macklem said the central bank “might have to take some action” if that trend were to reverse course.

Financial market odds call for the Bank of Canada to hold rates steady again at its next meeting on July 15, according to LSEG Data & Analytics. But markets are pricing in a quarter-point hike before the end of the year.

“We think that misses the mark. We think the Bank of Canada is more likely going to remain on hold for the remainder of this year,” Davenport said.

In order for the central bank to raise its policy rate this year, he argued core inflation would have to pick up steam and price pressures would have to broaden across the consumer basket. Long-term inflation expectations from businesses and consumers would also have to rise, but those have so far been grounded in the wake of the Middle East oil price shock.

“None of that, we think, is likely given the current weak macroeconomic backdrop,” Davenport said.

KPMG chief economist Ali Jaffery said in a media statement that the focus on recent economic weakness gave Macklem’s remarks a “dovish” tone -- suggestive of looser monetary policy rather than any tightening.

Risks of persistent inflation seem low in the face of a soft economy, Jaffery argued.

“Even if the economy perks up in Q2 -- which it likely will -- there is a lot of room for non-inflationary growth when an economy is coming out of a hole like this,” he said.

CIBC senior economist Andrew Grantham said in a note to clients that Wednesday’s rate decision reflects a “very patient central bank” content to wait and see how the risks play out.

He said CIBC continues to expect no change to the policy rate in 2026 as the current rate level supports a modest recovery in the economy starting later this year.

This report by The Canadian Press was first published June 10, 2026.