The Conference Board of Canada says it is cutting its estimate for economic growth in 2022

The Conference Board of Canada is cutting its estimate for economic growth for this year and next as central banks around the world hike interest rates in an effort to deal with soaring inflation.

In its new two-year outlook, the think tank says it is not expecting an economic contraction in Canada, but the risks are creeping up.

The Conference Board says it now expects Canadian economic growth will average 3.5 per cent this year followed by 2.6 per cent next year. That’s down from its earlier projections for growth of 4.0 per cent in 2022 and 3.3 per cent in 2023.

It says higher commodity prices are a saving grace for producers in Canada, but other sectors will have to cope with higher interest rates and slower export growth to the U.S.

The Bank of Canada is set to make its next interest rate announcement on Jul. 13 as it looks to bring the annual inflation rate which hit 7.7 per cent in May back to its target of two per cent.

It is expected by many economists that the central bank will raise its key interest rate by three-quarters of a percentage point, a move that would be its largest increase since 1998.