Are rate hikes over? Market watchers give their forecast to Bank of Canada

Click to play video: 'Bank of Canada holds rates at 5%'
Bank of Canada holds rates at 5%
The Bank of Canada has decided to hold its interest rates steady at five per cent. This is the second straight pause after 10 straight hikes. Our finance expert, Rubina Ahmed-Haq, joins Antony Robart with advice for homeowners in this week's edition of #YourMoney – Oct 26, 2023

Market watchers are not expecting any further interest rate hikes from the Bank of Canada in the current tightening cycle, according to a survey released Monday.

The Bank of Canada’s third-quarter survey of market participants, which includes senior economists and strategists tracking Canadian financial markets, was conducted between Sept. 20 and 28.

The median forecast from the survey’s 28 respondents showed the Bank of Canada holding its benchmark rate steady at 5.0 per cent until April 2024, at which point the balance of market participants are expecting the first rate cut of 25 basis points.

The policy rate is expected to drop to 4.0 per cent by the end of next year, based on the median responses.

The Bank of Canada has one more interest rate decision left this year on Dec. 6.

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Click to play video: 'With Canada’s interest rates temporarily on hold, what is the central bank’s next move?'
With Canada’s interest rates temporarily on hold, what is the central bank’s next move?

After rapidly raising its policy rate by 4.75 percentage points since March 2022, the central bank has held steady in its last two decisions, but policymakers continue to warn that rates might need to rise higher.

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The Bank of Canada will provide more insight into what led to its latest rate hold with the release of deliberations for its Oct. 25 rate decision on Wednesday.

The central bank has been tightening monetary policy in an effort to take steam out of the economy and bring inflation back down to its two per cent target.

Annual inflation cooled nationally to 3.8 per cent in September, while recent gross domestic product data has shown Canada’s economic growth might have stalled or even declined in the third quarter of the year.

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The median of responses to the Bank of Canada’s market watchers survey shows a 48 per cent chance of a recession hitting the country in the next six to 12 months. Tighter monetary policy was listed as a top downside risk to Canada’s economic growth by three in four survey respondents.

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