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%.