Bennett Jones Fall 2022 Economic Outlook: Managing Risks And Taking Action (Video)

The global economy is slowing down as supply constraints, a war, sanctions against Russia and tension in the global trade environment are pushing up prices and interest rates. Uncertainty is pervasive, from the price of commodities to the effects of zero-COVID policy in China.

For the United States and Canada, that also have to cope with excess demand at home, there is a range of plausible scenarios for the next two years. Aside from external factors hard to predict, much depends on the response of wages and prices to the rapid tightening of monetary policy that both central banks begun in the first quarter of 2022.

Our assessment is that wages and prices are likely to respond fairly smoothly to the reductions in domestic demand caused by higher interest rates. Inflationary pressures thus should begin to abate early in 2023, and central banks should be able to halt policy interest rate increases at peak levels of 5.25% in the United States and 4.5% in Canada.