Experts see interest rate cuts in 2024
October 16, 2023
BMO Economics released its updated interest rate forecast on October 5, 2023.
The new forecast is for a total of 50 basis points (0.50 per cent) of rate cuts in 2024, down from its previous forecast of 0.75 per cent. It expects the BoC to deliver its first quarter-point reduction in the third quarter of 2024, followed by a second cut in the fourth quarter.
In its previous forecast, BMO had expected the first rate cut to happen in the second quarter of the year.
“We still judge that current levels will likely mark the cycle peaks, and it remains a close call (i.e., highly data dependent),” wrote BMO’s deputy chief economist Michael Gregory.
“But, irrespective of another rate hike, we’ve reduced next year’s total rate cuts to 50 bps from 75 bps on both sides of the border,” he added. “This reflects the theme of ‘higher for longer’ amid continued economic resiliency (but less so now in Canada) and inflation stubbornness.”
The British Columbia Real Estate Association, meanwhile, released its latest mortgage rate forecast, in which it expects average 5-year discounted rates to remain near 6 per cent into early 2024, before slowly falling to 5.25 per cent by year end.
Average variable rates, however, are forecast to remain at a high of 7.20 per cent through the third quarter of 2024.