Desjardins predicts that the Bank of Canada will reduce interest rates by half by the end of next year

Desjardins Group forecasts that the Bank of Canada will begin cutting interest rates this spring, with the first rate reduction expected in June but potentially as early as April if inflation and economic conditions worsen more than anticipated. Desjardins anticipates a series of 25 basis point rate cuts at each meeting throughout this year and into 2025, ultimately aiming to halve the current interest rate by the end of next year. According to their projections, this would bring the Bank of Canada's key overnight rate down to 2.5 per cent by the close of 2025. Desjardins emphasizes that the Canadian economy is more sensitive to interest rates compared to the U.S., and they believe that lower borrowing costs will help mitigate the risk of a significant recession, although challenges are expected in 2025 due to mortgage renewals and associated payment increases.