Ed joined BNN for an interview this morning to discuss the Bank of Canada’s approach to interest rates. Ed began with his opinion that it is likely we will be in a recession next year. He elaborated by saying central banks were a bit slow to begin hiking rates, and he expects that they will hold rates a bit too high for too long. When inflation goes up, it’s effectively a tax on everyone, and Ed indicated that this complicates the politics of the BoC. He pointed out that a key objective for the BoC will be to solidify public credibility by demonstrating that they can control inflation. Once this is accomplished, Ed believes that they will reduce rates in the 1-3 year time horizon as long as inflation expectations start falling, as high levels of debt makes high interest rates unsustainable in the long-term.