Will Canadian interest rates fall in 2024?

After the Bank of Canada kept its key interest rate steady in its last three decisions through 2023, market expectations for a rate hike have eased and shifted sharply toward rate cuts.

Even the governor of the central bank, Tiff McClam, has acknowledged that the new year may see a rate cut, although he has consistently warned that the central bank is prepared to raise rates again if there is no progress in deflation.

Many Canadians, especially homeowners who plan to extend their mortgages and are prepared to make higher payments in the coming years, are anxiously awaiting signs that the tough times will end.

Economists predict a rate cut for 2024. But they believe that the path of the inflation rate reaching the two percent target of the central bank may be a bit difficult, which can delay the time of interest rate reduction next year.

The Bank of Canada's latest projections suggest that annual inflation will reach its two percent target by mid-2025.

According to Statistics Canada, the annual inflation rate reached 3.1% in November. Many economists expected inflation to drop below three percent in November, but the high prices of food in stores, as well as housing and some services, did not make this possible.

Some experts believe that reducing the mortgage loan rate at a time when the supply of housing is limited and the demand has increased due to the unprecedented growth of the population, can inflame the housing market in the spring and increase the risk of inflation again.

news source