The announcement includes a forecast that economic growth is set to pick up in 2024 on the back of strong population growth and a recovery in household spending. The Bank forecasts GDP growth of 1.5 per cent in 2024 overall. 2.2 per cent in 2025 and 1.9 per cent in 2026.
In commentary previewing the interest rate announcement earlier this week, RBC Global Asset Management Chief Economist Eric Lascelles noted that while we do expect cuts to come, BoC governor Tiff Macklem has been muted in his tone and has not promised cuts this year the way his counterpart at the US Federal Reserve has.
Lascelles attributes some of that caginess to fears that any rate cut may pour gasoline on the smouldering Canadian housing market. Given the issues of housing affordability currently plaguing Canada, Macklem may be loathe to signal when a cut comes for fear that it sends house prices higher once again.
“Monetary policy is working. Total consumer price index (CPI) and core inflation have eased further in recent months, and we expect inflation to continue to move closer to the 2% target this year,” the opening statement to Macklem’s press conference reads. “growth in the economy looks to be picking up. We expect GDP growth to be solid this year and to strengthen further in 2025… as we consider how much longer to hold the policy rate at the current level, we’re looking for evidence that the recent further easing in underlying inflation will be sustained.”
