Bank of Canada: No Further Interest Rate Hikes Expected

Rates to be Held at Current Level, Cuts Coming Later Than Predicted

According to market watchers, the Bank of Canada (BoC) is not anticipated to implement any additional interest rate increases in the near future. The central bank is now anticipated to maintain rates at their highest level in 15 years, 4.50%, until the end of 2023, before beginning to lower them later than previously predicted.

This shift in outlook is a consequence of the BoC's assessment that inflation is continuing to decline. In July 2023, the BoC announced that it would raise its overnight rate target by 25 basis points (bps) in response to persistent inflationary pressures. However, recent data suggests that inflation is beginning to moderate.

The BoC's decision to pause interest rate increases and eventually cut rates will be welcome news for borrowers, who have been struggling with higher borrowing costs. However, it is important to note that the BoC has indicated that it will continue to monitor inflation closely and will raise rates again if necessary to bring inflation back to its target of 2.0%.