The Bank of Canada is expected to cut the overnight interest rate by 25 basis points next Wednesday, bringing the rate to 4.50% amid expectations that inflation will continue to decline, according to a large majority of economists surveyed by Reuters. Nearly three-quarters of the economists included in the survey conducted from July 16 to 19, or 22 out of 30 economic experts, expect the Bank of Canada to lower the interest rate again to 4.50% on July 24.

Additionally, the survey results indicated that with the Canadian economy slowing and unemployment rates rising, the Bank of Canada is expected to cut interest rates two more times in 2024, although only a slight majority of economists expect a rate of 4.00% by the end of this year.

Meanwhile, economists anticipate that the Bank of Canada will continue to lower the interest rate after July, expecting the Bank of Canada to cut the interest rate two more times this year to reach 4.00% by the end of 2024, according to a slight majority of economists in the survey (about 16 out of 30 economists), while 10 of them expect the rate to reach 4.25% or higher. Moreover, only 4 economists expect the interest rate to reach 3.75% this year.

It is worth mentioning that some experts predicted at least 3 interest rate cuts by the Bank of Canada in 2024 since the beginning of this year, although a fourth cut may be challenging, partly because the U.S. Federal Reserve has not yet started cutting interest rates. They noted that although Canadian inflation has further declined within the Bank of Canada’s target range of 1% to 3% amid a weak labor market and easing business expectations, stable core inflation and wage growth may prompt caution from the Bank of Canada.