Bank of Canada Prepares for First Rate Decision of 2024

Expect no more interest rate hikes for 2024

Economists predict rates to hold steady until mid-2025

The Bank of Canada is widely expected to hold its key interest rate steady at 5.00% when it makes its first rate decision of 2024 later this week. This would mark a pause in the central bank's aggressive interest rate hiking cycle, which began in March 2022 in an effort to combat soaring inflation.

In a recent report, Oxford Economics researchers said they believe the 5.00% key rate will be held until the middle of 2025. This is in line with the Bank of Canada's own projections, which see inflation returning to the Bank's 2% target in 2025.

The trajectory of interest rates matters greatly for the roughly 40% of Canadian mortgage holders with variable-rate mortgages. These borrowers will see their monthly payments decline if the Bank of Canada holds rates steady or cuts them, and increase if the Bank raises rates further.

The Bank of Canada's decision on Wednesday will be closely watched by economists and market participants alike. It will provide important insights into the central bank's thinking on the economy and inflation, and will help shape expectations for interest rates in the coming months.