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  • Writer's pictureRIHANA PEIMAN

Forecast 2024 | What Big Banks say about the Bank of Canada's First Rate Cut in 4 Years

RBC, BMO, TD, Scotiabank and CIBC each lowered their prime rates by 25 basis points upon the Bank of Canada's 1st rate cut on June 5, from 7.2 per cent to 6.95 per cent.

"Economists at most of Canada’s major banks reacted quickly to the BoC cut, offering various interpretations of the language in the announcement and implications for future interest rate moves."

Here’s a round-up:

National Bank

On a July 24 cut: “We’d be inclined to bet they will ease again at the next meeting", Taylor Schleich and Warren Lovely, Economists

*Forecast for 2024: “Three more cuts over the last four decisions of the year isn’t a pace of cuts we would characterize as gradual and isn't as likely to materialize barring a more material slowdown in the economy.”

The Canadian Imperial Bank of Commerce (CIBC)

Andrew Grantham, senior economist at CIBC, believes Canadians will see more interest rate relief in short order.

“We continue to forecast a further 25 (basis point) reduction at the next meeting in July, and a total of four cuts (three more after today’s) by the end of the year.”

*Forecast for 2024: “We forecast three more cuts before the end of the year, with the policy rate finishing 2024 at 4.0%.”

The Toronto-Dominion Bank (TD)

James Orlando, director and senior economist with TD Bank, has been calling for rate cuts since the start of 2024.

“Like that one neighbor who has let their yard become overgrown, the BoC has heard the complaints and decided to bring out its policy trimmers to cut rates,” he said in a note.

“While the (Bank of Canada) has waited longer than we would have hoped, today starts the process of lower interest rates for Canadians going forward.”

On a July 24 cut: “We expect the BoC is on a cut-pause-cut path, with the next cut likely occurring in September.”

*Forecast for 2024: “We believe that the path forward for the BoC is going to be slow.”

The Bank of Montreal (BMO)

“The key message from today is that they are going to take this on a meeting-by-meeting basis, so every CPI report matters, as does every GDP and jobless rate release, to a lesser extent,” said Douglas Porter, chief economist with the Bank of Montreal.

“There are two CPI (and jobs) reports prior to the July 24 decision; if the inflation reports mimic the very mild results seen so far this year, a cut is very much on the table for that decision as well.”

Porter said this decision won’t help the economy all that much, but will give a “small bump” to economic sentiment and “brighten the mood” in the housing market.

*Forecast for 2024: “The key message from today is that they are going to take this on a meeting-by-meeting basis.”

Royal Bank of Canada (RBC)

On a July 24 cut: “Our own base case assumes another 25 basis point cut in July", Claire Fan, RBC Economist said.

*Forecast for 2024: “There will be 3 more rate cuts this year to lower the overnight rate to a still restrictive four per cent by the end of 2024.”

Scotia Bank

*Forecast 2024: "We forecast a cut in July and add 25bps to the year for 100bps of cuts in 2024."

Reference: Wealth Professional; Financial Post


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