The three remaining interest rate announcements before the end of 2024 are expected to lower the interest rate to 3.75 percent.

The Bank of Canada made its first cut of 0.25 percent on June 5, reducing the rate from 5 percent to 4.75 percent.

This was followed by another reduction on July 24 of 0.25 percent to 4.75 percent.

Central 1 anticipates further cuts of 0.25 percent on each of the remaining scheduled announcements: September 4 (4.25 percent), October 23 (4 percent), and December 11, 2024 (3.75 percent).

However, the core interest rate of 3.75 percent will remain in place until April 2025, when the Bank of Canada resumes its cuts with additional increases of 0.25 percent to reach 3.5 percent.

This rate will drop to 3.25 percent in June 2025, 3 percent in September 2025, and then to 2.75 percent in early October 2025.

The forecasts read, “There are few signs at this stage that inflation will flare up again, although it still poses a short-term risk. Economic data leading up to the inflation release was weak.”

The forecasts explained, “The labor market did not generate any net new jobs in June, while economic growth stagnated in April and May following a surge in March.

Retail spending decreased in May. While we are not seeing net job losses in the country, the unemployment rate rose to its highest level in two years amid a growing population.”

The forecasts indicated, “The economy has not absorbed population growth, leading to a decline in per capita GDP.

And companies have become more pessimistic in their forecasts, as a business outlook survey showed steady future sales, employment and investment expectations, and weak confidence among small businesses.”

The slowdown in economic growth is attributed to higher debt servicing costs as a direct result of the rising core interest rate and weak housing market conditions.

Although overall consumption is higher, this increased activity is driven by Canada’s rapid population growth fueled by immigration.

A mortgage renewal shock expected to begin in the latter half of 2024 is also forecasted to slow the economy, as consumers reallocate more of their disposable income towards interest payments.

Central 1 also pointed out that the Bank of Canada’s recent suggestions that inflation may fall more than expected due to weak household spending and increased supply in the economy.

The forecasts confirmed that “this shift in tone and direction indicates some concern from the bank and opens the door to more aggressive interest rate cuts in the future.”

Early economic data indicated that the recent initial cuts in interest rates in June and July did not have a significant impact on the housing market.

The Canadian Real Estate Association (CREA) anticipates that the slow return of the country’s real estate market will begin later in 2024, based on expectations of further interest rate cuts.