07:55 AM EST, 12/13/2024 (MT Newswires) -- There is a debate about where the Bank of Canada goes after Wednesday's 50bps rate cut, said Rosenberg Research.

The post-rate-cut press release and commentary were far less hawkish than is commonly portrayed by the legions of Bay Street economists who never predicted back-to-back 50bps rate cuts in any event, stated Rosenberg Research.

Canada's central bank now goes slow, but it still must cut rates further and more deeply before this cycle runs its course, noted Rosenberg.

The grim reality is that there is a crisis on household balance sheets, with debt relative to disposable income in "nosebleed" terrain at over 170%, it pointed out. That is over 30 percentage points above the United States credit bubble peak ahead of the 2008-09 Great Recession.

What that means is that Canadian households today have a debt-service ratio of 15%, at or above the levels that touched off the past three recessions, stated Rosenberg. Governor Tiff Macklem differed from his predecessor, Stephen Poloz, on the recession call -- but no head of any central bank is ever going to predict a recession.

The governor reports to the finance minister, an elected political official who is now fighting for her life, and Poloz no longer has that constraint, added Rosenberg.

The recent positive revisions to the gross domestic product data from Statistics Canada didn't change the reality that as of Q4, the country will have endured eight out of nine quarters of sequential negative readings in real economic activity on a per capita basis.

That isn't only a clear recession barometer, having occurred only in the context of outright recessions, but is unprecedented, having taken out the horrible economic downturn in 1981-82, according to Rosenberg. It loves the Government of Canada bond market and fades the Canadian dollar (CAD or loonie).