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Bank Of Canada To Hold Key Rate At 5% Until March 2024: Survey

Bank Of Canada To Hold Key Rate At 5% Until March 2024: Survey

The Bank of Canada (BoC) is expected to hold its trendsetting overnight interest rate at 5% until March 2024, according to a new survey of economists and market participants.

The survey, which was conducted by Canada’s central bank, found that most economists anticipate that interest rates will remain at a 22-year high of 5% until next spring when rates will begin to move lower.

In a previous survey released this past April, economists expected the Bank of Canada to start cutting interest rates in January 2024.

The latest central bank poll also found that economists’ outlook for the Canadian economy has improved, with a majority now forecasting a 0.7% increase in Gross Domestic Product (GDP) this year, up from previous forecasts of a 0.1% contraction.

This finding suggests that economists now feel the Bank of Canada might be able to orchestrate a so called “soft landing,” which is when interest rates rise without prompting a recession.

The Bank of Canada has raised interest rates 10 times since March 2022 and said it could raise rates further if inflation remains above its 2% annualized target.

Most market participants surveyed now expect Canada’s inflation rate to end this year at 3%, compared with 2.7% previously.

Expectations that the inflation rate will fall to 2.2% by the end of 2024 remain unchanged.

The Bank of Canada is scheduled to make its next decision on interest rates on September 6.