TD analysts forecast Bank of Canada to lower rates by 25 basis points today

Bank of Canada meeting outcome is due on Wednesday, October 23, 2024:

• at 1345 GMT / 0945 US Eastern time
• press conference follows 45 minutes later

Earlier:

• Bank of Canada expected to cut by 50 basis points and continue cuts to end-2025

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In a note from TD, analysts predict that the Bank of Canada (BoC) will continue to lower interest rates by 25 basis points at each meeting through June 2025, eventually bringing the policy rate to 3.75% by the end of this year and 2.75% by mid-2025. This outlook comes as both headline and core inflation have trailed the projections set in the BoC’s July Monetary Policy Report (MPR), leading TD to dismiss the likelihood of a pause in the central bank’s current easing cycle.

However, despite the easing momentum, TD suggests that the economic outlook would have to weaken further for the BoC to consider larger rate cuts of 50 basis points, given the stronger-than-expected economic activity since the September 4th policy decision.

TD continues to view the BoC’s neutral rate at 3.00%, indicating that monetary policy could enter accommodative territory before returning to neutral by the end of 2026. Additionally, the forecast assumes the BoC will revise its terminal rate upward in April 2025.

This article was written by Eamonn Sheridan at www.forexlive.com.