According To Market Players In Canada, Rates Will Remain Unchanged In 2023

According to the median response from market participants in the central bank’s survey, which was issued on Monday, the Bank of Canada would keep interest rates at the 15-year high of 4.50% until the end of 2023 before beginning to lower rates at the start of next year.
The survey, the follow-up to a survey of market participants first published in February, revealed that a median of respondents expected interest rates to decline to 3% by the end of 2024.

Market participants predicted that rates would drop to 4.0% by the end of the year in the first survey, which was published in February.

In contrast to the 0.4% decline expected in the previous survey, a median of 26 participants predicted a 0.1% contraction of the gross domestic product at the end of 2023.

The participants in the survey, which was conducted from March 9 to 23, identified tightened financial conditions and a sluggish housing market as the top concerns that could slow Canadian economy.

In an effort to reduce the high inflation that peaked at a four-decade high last year, the bank raised interest rates eight times in a row through the month of January.

Since then, the bank has maintained rates at both of its meetings, in part as a result of Governor Tiff Macklem’s assertion that the objective is to restrict growth while avoiding a recession.

Although it decreased to 4.3% in March, the annual inflation rate remains above than the bank’s 2% target. By the end of the next year, the bank anticipates reaching its inflation objective.

At the conclusion of the year, the median expectation for annual inflation is 2.7% as opposed to the earlier prediction of 2.9%.