Canada is likely in for another year of elevated inflation, at least one more interest rate hike and a continued downturn in the housing market, BMO said in a note predicting the top economic trends for 2023. A mild recession and lower than normal Canadian dollar are also in the cards.

Inflation is first on the list, and BMO economists believe both headline and core readings will stay stuck above three per cent. That doesn’t mean prices of goods won’t come down at all. As supply chain pressures continue to ease, energy prices stabilize and interest rates do their work, headline inflation should improve, and consumers should see price increases level off.

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