Bank of Canada Projects No Further Interest Rate Hikes Until April 2024

The Bank of Canada (BoC) predicts that there will be no further interest rate hikes in the current cycle, and the benchmark rate is expected to remain at 5.0% until April 2024. Following that, a reduction of 25 basis points is anticipated, lowering the policy rate to 4.0% by the end of 2024.

This forecast follows a series of rate increases totaling 4.75 percentage points since March 2022. Despite these adjustments, the BoC has opted to keep rates steady during its last two meetings, including the most recent one on October 25, while cautioning about the possibility of future hikes. The next policy decision is set for December 6.

Tiff Macklem, the bank’s governor, informed the Senate Committee on Banking on November 1 that further interest rate hikes in the current tightening cycle are unlikely. This view was supported by senior economists and strategists who participated in the bank’s third-quarter market survey.

The BoC has been tightening monetary policy in an effort to achieve its two percent inflation target. However, with annual inflation at 3.8% as of September and third-quarter GDP figures indicating potential economic stagnation or decline, there are considerable risks to Canada’s economic growth. The survey suggests a 48% chance of recession within the next six to twelve months due to the tighter monetary policy. More insights into these developments will be available following the December 6 rate decision.

This article was generated with the support of AI and reviewed by an editor.