However, a recent FCC report<\/a> predicts Canada\u2019s economy decelerating due to factors like interest rates, ongoing trade uncertainty and voluntary country of origin labelling (vCOOL).<\/p>\n <\/p>\n Read Also<\/p>\n U.S. senators push USDA for urgent action on bird flu vaccine<\/p>\n A bipartisan group of U.S. senators this week urged the administration of President Donald Trump to finalize a science-based plan for developing a bird flu vaccine for livestock, according to a letter seen by Reuters. <\/p>\n <\/a><\/p>\n \u201cThe message there was basically that maybe there\u2019s a little bit of complacency in the markets,\u201d said Krishen Rangasamy, FCC\u2019s principal economist and the report\u2019s author.<\/p>\n Interest rates<\/p>\n He said there is a chance interest rates will go down next year. This is likely to affect farmers, who are heavy borrowers<\/a>. The report cites several complications for residential construction, which accounts for about eight per cent of Canada\u2019s economy.<\/p>\n \u201cEven though the Bank of Canada, in our view, should probably lower rates next year \u2026 long rates are probably not going to change a whole lot from here.\u201d<\/p>\n Rangasamy said this is related to Canada\u2019s bonds being closely linked to U.S. treasuries.<\/p>\n \u201c\u2019Oh, the Bank of Canada is lowering rates. Why isn\u2019t my mortgage rate falling? I\u2019m about to renew, and it\u2019s still high.\u2019 Well, then that\u2019s the answer, right? So, you\u2019re borrowing at the long end of a yield curve, not at the short end.\u201d<\/p>\n The five-year bond rate is at three per cent. Five years ago in 2021, it was one per cent.<\/p>\n \u201cWhich tells you if you originated five years ago in 2021 and you\u2019re going to renew in 2026 what\u2019s going to happen? You\u2019re going to renew at a higher rate, a way higher rate than what you originated at,\u201d said Rangasamy.<\/p>\n \u201cWhoever is going to renew next year a fixed rate product at the longer end of a yield curve, it\u2019s going to be painful.\u201d<\/p>\n Business confidence decreasing<\/p>\n Investment intentions over the next year are also predicted to drop, as the report shows business confidence decreasing in Canada.<\/p>\n The cloud that is uncertainty with the U.S.<\/a> is expected to continue to cause problems.<\/p>\n \u201cAt the moment it looks like it\u2019s going to stay there for 2026,\u201d Rangasamy said.<\/p>\n The report predicts that \u201cas the impact of the AI investment boom fades, cracks formed by the White House\u2019s policies on tariffs and immigration will become more visible stateside.\u201d<\/p>\n This could lead to a drop in demand for exported Canadian goods, 70 per cent of which are purchased by the U.S.<\/p>\n \u201cAny drop in U.S. demand will have repercussions on this side of the border,\u201d the report states.<\/p>\n One factor could help ease trade tensions: negotiations on the Canada-United States-Mexico Agreement (CUSMA) are set to begin next summer. Rangasamy said it is possible, even likely CUSMA will be renewed. Until anything is certain, the cloud will linger.<\/p>\n \u201cThat\u2019s one of the reasons we\u2019re not that optimistic about the rebound of business investment in Canada,\u201d he said. \u201cOne thing businesses don\u2019t like is uncertainty, and that U.S. trade policy is certainly wreaking havoc in that regard.\u201d<\/p>\n Country of origin labelling<\/p>\n Another potentially aggravating factor is voluntary country of origin labelling<\/a> (vCOOL) rules in the U.S., set to come into effect Jan. 1.<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/12\/236885_web1_Dec-2025_broiler-chickens_getty-images_1.jpg\")
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