06:39 AM EDT, 09/25/2024 (MT Newswires) -- Canadian central bankers aren't looking to inject more uncertainty into an already uncertain world, said Desjardins after Bank of Canada Governor Tiff Macklem took part in a Tuesday fireside chat in Toronto.

As such, their focus has largely shifted towards risk management and balancing the downside risks to growth with potential upside risks to inflation from easing policy too quickly, stated the bank. The latter of those risks is less of a concern to Desjardins, but Macklem was clear that he wanted to see more progress on core inflation, in particular shelter, which has remained stubbornly sticky.

Risks around economic activity are skewed to the downside, noted the bank. The governor pointed to growing household financial stress. Canadian mortgage holders have experienced modest increases in their levels of financial stress since the May Financial Stability Report.

Indeed, mortgage arrears continue to rise, although Macklem noted that mortgage holders haven't yet leaned on revolving credit products to manage their expenses. Meanwhile, renters remain stressed with growing signs that these cohorts are falling behind on credit card and auto loan payments.

All of this reinforces the view that Canada's central bank will keep cutting rates, pointed out Desjardins.

On the outlook, Governor Macklem reiterated that growth picked up in the first half of the year, but appears to have slowed more recently, and may not be as strong as his central bank expected. The bank's tracking for Q3 suggests gross domestic product growth is well below the BoC's July figure.

Going forward, all eyes will be on consumer spending, hiring and business investment. Desjardins continues to believe that the BoC will ease policy rates by 50 basis points in October.