Bank of Canada to make rate decision today

The Bank of Canada (BoC) will likely cut interest rates to 4.75% today.

14 of 29 polled economists predict that interest rates will continue to fall to 4.00% by the end of 2024, with others bullishly predicting 4.25% or higher. There are concerns amongst economists that these cuts may negatively affect borrowing costs, mortgage rates and general economic activity. Last month, Canadian Finance Minister Chrystia Freeland said that the recent federal budget has created conditions for interest rates to come down. Freeland additionally noted that annual wage growth had outpaced inflation for over a year.

High interest rates may keep borrowing costs elevated, affecting mortgages, loans and overall consumer spending. If they persist in the short-term, this could slow down economic growth and discourage spending and investment. However, if economists are accurate in their forecasts, these pressures associated with inflation are likely to subside somewhat. Essential costs in Canada remain high. Housing costs like rent and mortgage interest rates continue to put strain on households. Expect decreasing interest rates, alongside targeted relief measures, to ease cost of living in Canada. Long-term economic growth in Canada may require addressing structural issues like housing supply, and increased cost of living. Lower interest rates paired with increased housing supply and improved market competition may create a more sustainable economic environment.