Canada Still On Track For Spring Interest Rate Cut: Economists

“We expect five 25-basis-point cuts to the Canadian and US overnight rates this year, with further easing likely to follow in 2025.”

Economists with Desjardins are sticking with their long-held belief that the Bank of Canada will begin cutting interest rates this spring.

This is in spite of the fact that economic data as of late has “surprised to the upside,” they explain in a report from Thursday, pointing more specifically to the recent resilience of retail sales.

“The housing market also showed renewed signs of life around the turn of the year. The sustained surge in population growth has been providing a tailwind to domestic demand as growth in real GDP and consumption per capita have languished,” says the report.

“Taken together, this has caused us to revise up our outlook for real GDP growth modestly in 2024. But growth is still expected to be sluggish overall, as ongoing mortgage renewals will continue to act as a headwind to growth. As a result, the Bank of Canada should begin cutting interest rates around the spring.”

Though economists with other major banks agree that there’s an end to soaring rates in sight, there’s still some debate over when the first cut will happen. A provincial forecast from CIBC Capital Markets released last week calls for a 25-basis-points cut in June. Meanwhile, economists over at TD mapped out a scenario just a few days ago in which the first cut doesn’t come until December.

READ MORE: https://storeys.com/boc-spring-interest-rate-cut-economists/