Canada Finance Minister Freeland Warns No Guarantee of Soft Landing

By Paul Vieira

OTTAWA–Canadian Finance Minister Chrystia Freeland said Thursday there is no guarantee that authorities’ efforts at curbing historically high inflation won’t trigger a recession.
“I do not underestimate the economic difficulties and uncertainty of the months to come. A soft landing is not guaranteed,” Ms. Freeland said, according to a copy of remarks she was set to deliver to a business audience in Toronto.

A soft landing is when authorities, most notably the central bank through interest rate rises, can successfully slow down economic activity without triggering a recession, usually defined as two consecutive quarters of negative growth.
The Bank of Canada is on an aggressive rate-rising path, having lifted its policy rate by 1.25 percentage points since March, and signaled it could consider a three-quarter point increase in July because inflation is showing no signs of easing.
Canada’s central bank, Ms. Freeland said, “has the tools and the expertise it needs to keep inflation from becoming entrenched.”
Bank of Canada Gov. Tiff Macklem said last week it is the central bank’s goal to engineer a soft landing, “but it is going to be delicate, and there are risks around that.”
Economists have recently downgraded the growth outlook in Canada for the second half of this year, citing the impact of rate increases on the country’s housing market–a significant economic-growth driver in recent years–and on consumer habits.
Write to Paul Vieira at paul.vieira@wsj.com