The economy will stall in the second half of 2023 but it won’t contract, according to a monthly Bloomberg survey of 27 economists. The median forecast sees the Bank of Canada holding its overnight rate at five per cent well into next year — with no rate cuts until April.
The results support the Bank of Canada’s view that economic growth is moderating, while core inflation remains elevated. Governor Tiff Macklem said this month that policymakers are trying to balance the risks of over- and under-tightening, and avoid “making economic conditions unnecessarily painful for everybody.”
Unexpected strength in household spending earlier this year prompted the central bank to raise rates in June and July after a brief pause. But growth in consumption spending is projected to slow over the next year, as demand for rate-sensitive goods and services weakens and more households renew their mortgages at higher rates.
