We haven’t changed our forecasts for Federal Reserve and Bank of Canada policy rates since the previous issue of Rates Scenario in mid-December. Both central banks shifted into pause mode after their last rate hikes in July, as the topic of policymakers’ discussions has since switched from whether rates are restrictive enough to how long rates should remain restrictive. The answer, for both the Fed and BoC, is until the evidence is unequivocal that inflation is on a sustainable path to 2%. The evidential scale is expected to be tipped as such by around mid-year, at which point rate cuts should start.
Rates Scenario for February 5, 2024
