A majority of economists don’t expect the Bank of Canada to start cutting interest rates until June of this year, according to a new poll by the Reuters (TRI) news agency.
Despite the economy slowing, the latest data shows that inflation in Canada remains sticky, with the Consumer Price Index rising 3.4% year-over-year in December, up from 3.1% in November.
Consequently, economists expect the Bank of Canada to hold its benchmark overnight interest rate at its current level of 5% until the start of summer.
The Reuters poll found that all 34 economists surveyed expect Canada’s central bank to hold interest rates at current levels when it next meets on Jan. 24, as well as in March of this year.
About two-thirds (67%) of economists don’t expect any change in interest rates until June of this year, at the earliest.
Markets are currently pricing in interest rate cuts starting in April of this year.
Among the polled economists, 76% said the timing of the first rate cut is likely to be later than they previously expected due to stubbornly high inflation that remains above the Bank of Canada’s 2% annualized target.
Economists also expect the Bank of Canada’s overnight interest rate to fall a total of 100 basis points this year and sit at 4% by the end of December.
Lastly, the latest poll found that only a handful of economists expect Canada’s economy to fall into a recession in 2024.
