Charles St-Arnaud believes that the board of directors will see the factors related to supply chains as temporary. (Archive photo)
Charles St-Arnaud, who worked as an economist at the Bank of Canada, thinks instead that the board of directors will see the supply chain factors as temporary. He still believes the first rate cut could be made in June.
The Bank of Canada will want to be relatively patient before starting to reduce its rates, estimates Charles St-Arnaud. This allows him to have more information, more data on economic activity before making his decision.
The price of a barrel of oil will also be a factor to watch this year, according to the chief economist of Alberta Central. A very sharp rise in energy prices, if the situation in the Middle East deteriorated, would have much more impact from an inflationary point of view, he notes.
During his press conference in December, the Governor of the Bank of Canada, Tiff Macklem, emphasized that the global economy was volatile and that central banks needed to demonstrate great flexibility in this context.
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In the press release of its most recent decision, the Bank of Canada has also kept the sentence according to which it remained ready to increase the policy rate again if necessary, even if the Governing Council judged that the probability that monetary policy would be restrictive enough to achieve the inflation target had further increased.
For the moment, she is refusing to talk about when she might start lowering her key rate.
It is certain that if inflation, as it seems to be the case, galloping upwards this winter, those who expected rate cuts to get into the real estate market this spring will have to wait until the summer, the fall and perhaps even even longer than that, notes Sébastien Lavoie.
Scotiabank's chief economist, Jean-François Perrault, fears that the enthusiasm of buyers hoping to benefit from rate cuts will cause them to take action prematurely.
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Although home prices have fallen a bit from the peaks reached during the pandemic, the combination of rates of Elevated interest and buyers waiting for prices to fall further has created a slow sales market across most of the province, according to several industry data. (File photo)
One of the problems for the Bank of Canada is that if people anticipate declines too much and relaunch themselves in the real estate market at the start of the year or in the spring, the effect will be too stimulating for the economy and the Bank of Canada may be forced to delay the cuts or do less, says Jean-François Perreault.
The Bank of Canada will publish its first decision and its first monetary policy report of the year on January 24.