Will the Bank of Canada cut interest rates this year? What market watchers are saying
None of the 28 market players surveyed predicted that rates would go higher this year, while some forecast that the key borrowing rate could fall to 3.75 per cent by December. A median of those surveyed put rates at three per cent in the fourth quarter of next year.Story continues below advertisement
After the rate decision on Jan. 25, Governor Tiff Macklem in an interview pushed back against traders who were betting that the central bank would cut rates as soon as October, saying the bank is pausing to determine whether rates must go higher, not lower. In the same survey, a median of 26 market participants forecast that real gross domestic product will be down 0.4 per cent at the end of this year versus a year earlier, and will bounce back to grow two per cent annually by the end of next year.
The median forecast for annual inflation is 2.9 per cent at the end of the year, which is just inside the central bank’s one-to-three-per-cent target range, compared with 6.3 per cent inflation in December.
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