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MNI INTERVIEW: BOC Keeping 2024 Policy Restrictive- CD Howe

(MNI) OTTAWA

Interest rate seen falling around midyear but staying at least 75bps above neutral.

Canada's central bank will keep interest rates well above neutral this year, even in the most optimistic scenario for lowering the highest borrowing costs in decades as inflation moderates, the head of a shadow policy council told MNI.

Bank of Canada Governor Tiff Macklem is likely to cut the 5% rate twice between March and July as the drag of his 10 rate hikes makes some progress cooling the housing market and prices of goods and services, Bill Robson of the CD Howe think tank said. None of the shadow policy council members said the Bank should cut over the next year into the 2%-3% range the central bank estimates for the neutral rate, and the median vote was for a 3.75% rate a year from now.

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Canada's central bank will keep interest rates well above neutral this year, even in the most optimistic scenario for lowering the highest borrowing costs in decades as inflation moderates, the head of a shadow policy council told MNI.

Bank of Canada Governor Tiff Macklem is likely to cut the 5% rate twice between March and July as the drag of his 10 rate hikes makes some progress cooling the housing market and prices of goods and services, Bill Robson of the CD Howe think tank said. None of the shadow policy council members said the Bank should cut over the next year into the 2%-3% range the central bank estimates for the neutral rate, and the median vote was for a 3.75% rate a year from now.

Keep reading...Show less