Economists' predictions about the Central Bank's decision on interest rates

Economists predict that Canada's inflation rate decreased last month, but they are not yet sure whether the Bank of Canada is on track to cut interest rates in June. Statistics Canada is scheduled to release its April consumer price index report on Tuesday. As the central bank prepares for an interest rate decision on June 5, new inflation data will be important for the central bank.

BMO chief economist Douglas Porter said annual inflation is expected to have eased to 2.8 percent in April, down from 2.9 percent in March.

Economists widely expect the central bank to start cutting policy rates in June or July.

But recent employment figures have dampened expectations of an interest rate cut next month. This has made the April inflation rate report important for forecasters.

According to Porter, economists currently see a 40% chance of a rate cut by the Bank of Canada in June.

Tif Maklam, the head of the central bank, admitted that the central bank is closer to lowering the interest rate, but it should see the continuation of the downward movement for a longer period of time.

The main interest rate of the central bank is currently five percent, which is the highest interest rate since 2001.

Royce Mendez, managing director and head of macro strategy at Desjardins, also expects Tuesday's inflation report to pave the way for interest rate cuts in the coming weeks.

 

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