\nArticle content<\/h2>\n The Bank of Canada will likely start cutting interest rates in the second quarter of 2024, predicts the chief economist at Deloitte Canada.<\/p>\n
Deloitte is forecasting three 25-basis-point cuts from the central bank, which would reduce its overnight policy rate from five per cent to 4.25 by the end of 2024.<\/p>\n<\/section>\n\nArticle content<\/p>\n
\u201cWe\u2019re going to have two per cent [inflation] in the Bank of Canada\u2019s sights,\u201d Dawn Desjardins said in a recent interview with the Financial Post\u2019s Larysa Harapyn. \u201cThat will open the door for them to start to give some interest rate relief.\u201d<\/p>\n<\/section>\n
\n
\nAdvertisement 2<\/p>\n
\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n
\n
\n\n<\/p>\n
\n
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY<\/p>\n
Subscribe now to read the latest news in your city and across Canada.<\/p>\n
\nExclusive articles from Barbara Shecter, Joe O’Connor, Gabriel Friedman, Victoria Wells and others.<\/li>\n Daily content from Financial Times, the world’s leading global business publication.<\/li>\n Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.<\/li>\n National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.<\/li>\n Daily puzzles, including the New York Times Crossword.<\/li>\n<\/ul>\n<\/div>\n\n
SUBSCRIBE TO UNLOCK MORE ARTICLES<\/p>\n
Subscribe now to read the latest news in your city and across Canada.<\/p>\n
\nExclusive articles from Barbara Shecter, Joe O’Connor, Gabriel Friedman, Victoria Wells and others.<\/li>\n Daily content from Financial Times, the world’s leading global business publication.<\/li>\n Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.<\/li>\n National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.<\/li>\n Daily puzzles, including the New York Times Crossword.<\/li>\n<\/ul>\n<\/div>\n\n
REGISTER TO UNLOCK MORE ARTICLES<\/p>\n
Create an account or sign in to continue with your reading experience.<\/p>\n
\nAccess articles from across Canada with one account.<\/li>\n Share your thoughts and join the conversation in the comments.<\/li>\n Enjoy additional articles per month.<\/li>\n Get email updates from your favourite authors.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/header>\n<\/section>\n<\/div>\n\nArticle content<\/p>\n
Canada\u2019s inflation rate is still a ways away from the Bank of Canada\u2019s two per cent target, but continues to come down. The consumer price index slowed to 3.1 per cent year over year in October from 3.8 per cent the month before.<\/p>\n
Meanwhile, the economy remains weak as we exit 2023. Real gross domestic product shrank by 0.3 per cent in the third quarter and 1.1 per cent on a yearly basis.<\/p>\n
Desjardins is anticipating these trends to continue in the new year. The Bank of Canada will then be in position to lower policy rates.<\/p>\n
\u201cA lot of things are sort of in train,\u201d she said. \u201cWe see that the inflation pressures have eased considerably.\u201d<\/p>\n
She added that consumers and businesses are expecting the central bank to be successful in getting inflation back to two per cent.<\/p>\n
\u201cWe\u2019re going to get through this hump,\u201d Desjardins said. \u201cThis provides some support for households.\u201d<\/p>\n
Desjardins added that Canada is currently experiencing a mild recession. She believes that 2024 will have a slow start but the economy\u2019s pace should pick up a through the course of the year.<\/p>\n
The unemployment rate, now at 5.7 per cent, is set to rise above six per cent from Canada\u2019s rapid growth in population, but there won\u2019t be a huge weakening in the labour market, she said.<\/p>\n<\/section>\n
\n
\nAdvertisement 3<\/p>\n
\n
\n
\n
\n
This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n\nArticle content<\/p>\n
\u201cWe\u2019re not looking for wholesale job losses,\u201d Desjardins said. \u201cThat\u2019s one of the mitigating factors for the economy.\u201d<\/p>\n
She added that employers will be more likely to retain their current work force following the \u201csignificant trauma\u201d they went through during the pandemic and the reopening of the economy.<\/p>\n
Desjardins said that companies, which right now are facing intense pressure from higher wages and interest costs, might be able to negotiate lower levels of wage growth in the year ahead.<\/p>\n
\u201cAs a worker, if we\u2019re starting to see some fraying in the labour market, we\u2019re probably not going to be quite as aggressive in terms of our negotiations for wages,\u201d she said.<\/p>\n
In terms of recovery, Desjardins sees the economy moving back into positive growth territory before the end of 2024, as long as the labour market holds up.<\/p>\n\nRelated Stories<\/p>\n
<\/p>\n\n How Canadians are coping with higher interest rates in 5 charts<\/span><\/p>\n<\/li>\n David Rosenberg is ‘downright bearish’ on Canada’s economy<\/span><\/p>\n<\/li>\n What economists say about Bank of Canada’s hold<\/span><\/p>\n<\/li>\n<\/ol>\n<\/section>\n\u201cWe have a very low growth rate overall in 2024 but I think the pattern is going to be more encouraging,\u201d she said.<\/p>\n
Desjardins stressed that the Bank of Canada will remain cautious so that inflationary pressures are not reignited before we hit a two per cent inflation rate on a sustained basis.<\/p>\n
\u201cIf they ease too early or too much, it could really just reignite a cycle that puts upward pressure back on the inflation rate,\u201d she said. \u201cThat\u2019s one thing that they really do want to avoid.\u201d<\/p>\n
\u2022 Email: novid@postmedia.com<\/em><\/p>\nBookmark our website and support our journalism:<\/strong> Don\u2019t miss the business news you need to know \u2014 add financialpost.com to your bookmarks and sign up for our newsletters here.<\/em><\/p>\n<\/section>\n\nArticle content<\/p>\n<\/section>\n\nShare this article in your social network<\/p>\n<\/section>\n<\/div>\n\n
Breadcrumb Trail Links News Economy Economy will slow at start of new year, but pick up later Published Dec 16, 2023 \u00a0\u2022\u00a0 Last updated 2\u00a0hours ago \u00a0\u2022\u00a0 3 minute read…<\/p>\n","protected":false},"author":2,"featured_media":41856,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":{"0":"post-41855","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy"},"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/41855","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=41855"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/41855\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/41856"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=41855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=41855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=41855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}