A survey of experts by Finder reveals expectations ahead of Bank of Canada’s latest interest rate decision on Wednesday
With the Bank of Canada set to reveal its latest interest rate decision on Wednesday, a panel of economists and other experts are certain of what will happen.
It will be a hold steady according to a unanimous panel of 10 convened by financial comparison site Finder. Most agree that this is the best course of action at this time.
This aligns with a previous survey of economists from Reuters.
The one who disagrees, housing market analyst and economic expert Will Dunning, thinks there should be a cut of 0.5 percentage points and he says that inflation will not be fixed by rate hikes, given the unusual drivers of higher prices this time.
The panel was split on whether inflation would come down to within the BoC’s target range of 1-3% by the end of 2023 or sometime in 2024. Four of the experts were on each side of opinion.
Although there could be a rate cut, perhaps in the fall, it is more likely to be 2024 before the central bank makes any significant changes to interest rates.
"Despite the economy's surprising resilience early this year, we continue to believe a recession will be unavoidable in 2023," explains Tony Stillo, Director of Economics for Canada at Oxford Economics. "As the full impact of higher interest rates works through the economy, credit tightens due to financial sector stress, and the US slips into recession."
Housing market
The panel was also asked about the Canadian housing market with 3 out of 4 expecting further decreases in prices.
Five of the panel anticipate a 10% drop in housing prices, but one of the experts thinks that prices could rise by 2.5% in 2023.
"The housing market continues to defy expectations, and this is primarily because local zoning laws restrict the ability of homebuilders to capitalize on the clear profit opportunities that exist to substantially increase the stock of housing in Canada," explained Moshe Lander, senior lecturer in economics at Concordia University. "Increased interest rates will slow down the upward trend in prices, but the market will get used to the new normal and recover by the end of the year."
The full report is at https://www.finder.com/ca/bank-of-canada-interest-rate-forecast?msID=5c4a1f0f-86eb-42a0-ae01-1695f5daf3ec
