Canadian market participants see rates staying at 5 per cent in 2023: BoC survey

  7/24/2023 |   SHARE
Posted in Mortgage Interest Rates by Kit Blott| Back to Main Blog Page

Mortgage Rates - Interest Rates

The Bank of Canada (BoC) will not raise rates again and will start cutting a little later than previously anticipated, according to a survey of market participants released by the central bank on Monday.

The BoC's second-quarter survey, conducted from June 8 to 19, showed a median of the participants expect the bank to hold interest rates at a 22-year high of 5.00 per cent until the end of 2023, before starting to cut rates in March.

In the previous survey released in April, when the BoC's key policy rate was at 4.50 per cent, median expectation was for a rate cut in January. Money markets still see a chance for another rate hike this year

A median of 25 participants now also predict a 0.7 per cent gross domestic product growth at the end of 2023, instead of a 0.1 per cent contraction forecast in the last survey.

Earlier this month, the BOC said there was excess demand in the economy as it raised its GDP forecast and extended the timeline for inflation to return to the bank's two per cent target.

The bank has hiked rates 10 times since March 2022 and said it could raise rates further because of the risk of inflation stalling above its 2 per cent target.

In the survey release on Monday, the median forecast for annual inflation is for 3.0 per cent at the end of this year, compared with 2.7 per cent previously. Expectations for the inflation rate to drop to 2.2 per cent by end-2024 were unchanged.

The central bank expects inflation to remain around three per cent over the next year before dropping to its target by mid-2025, six months later than it previously anticipated.

Source: CTV

Bank of Canada, Bank of Canada Benchmark Rate, Canada Inflation Rate, Mortgage Rates Canada, Variable Rate Mortgages

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