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Will the Bank of Canada Cut Interest Rates in 2021? A Look at What Market Watchers Are Saying
The Bank of Canada is set to cut interest rates by half a percentage point to four percent by December, according to a median of market participants polled by the central bank, with borrowing costs likely to fall further next year.
The Bank of Canada published its first quarterly survey of market participants on Monday.
Last month, the bank raised its policy rate to 4.5 percent, its highest level in 15 years, and said it would halt further hikes for the time being.
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None of the 28 market participants polled predicted interest rates would rise this year, while some expected the benchmark interest rate to fall to 3.75 percent by December. A median of those surveyed estimates interest rates at three percent in the fourth quarter of next year.
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In an interview following the Jan. 25 rate decision, Gov. Tiff Macklem hit back at traders who had bet the central bank would cut rates as early as October, saying the bank is hesitant to determine whether rates will be higher and not would have to go lower.
In the same poll, a median of 26 market participants forecast that real gross domestic product will fall 0.4 percent year-on-year by the end of this year and return to growing at 2 percent annually by the end of next year.
The median forecast for annual inflation is 2.9 percent by the end of the year, which is just within the central bank’s target range of 1 to 3 percent, compared with 6.3 percent inflation in December.
Source: globalnews.ca
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