When will the Bank of Canada start lowering interest rates?

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“Some factors that weighed on output in Q2 will prove ‘transitory’ – including disruptions due to wildfires and a strike by federal workers in April,” RBC said. “But there are other indications that a long-expected ‘mild’ economic downturn may have already begun.”

“Economic growth already looks dramatically softer in the context of a surging population. On a per-person basis, Canadian GDP has now declined for four straight quarters.”

With economies around the world continuing to wind down, the Bank of Canada has maintained that it will be standing by its current policy strategy until it reaches its inflation target of 2%.

“Price pressures remain ‘sticky’ in Canada,” RBC said. “Amid a softening in GDP growth and labour markets, we expect the BoC to stay on the sidelines, holding rates steady into 2024.”

US interest rates not likely to go down soon

While the situation in the US is the reverse of Canada’s, with resilient economic growth and easing inflation pressures, “that washes out to the same net monetary policy response on both sides of the border, with the [US Federal Reserve] also holding interest rates at current levels into 2024,” RBC said.

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