According to the Bank of Canada‘s latest quarterly Market Participants Survey, which polled 28 influential financial market participants, most respondents expect the central bank to implement two more quarter-point rate cuts, bringing the policy rate to 2.50% by July.
This is 25 basis points lower than the forecasts in the Q3 survey, and half of those polled said they believe their forecast is skewed to a lower rate path, while just 11% believe the risks are skewed to a higher path.
The Bank of Canada is then expected to maintain a 2.50% policy rate until the first quarter of 2027, when a median of those polled anticipate the first rate hike to 2.75%.
The outlook from the Bank of Canada’s survey is a bit more cautious compared to the current forecasts from the Big 6 banks, which see the policy rate either remaining at 3.00% or falling to 2.75% in March, and ending the year anywhere between 2.00% and 2.25%.
BoC policy rate forecasts from the Big 6 banks
| Current Policy Rate: | Policy Rate: Q1 ’25 | Policy Rate: Q2 ’25 | Policy Rate: Q3 ’25 | Policy Rate: Q4 ’25 | Policy Rate: Q4 ’26 | |
|---|---|---|---|---|---|---|
 | 3.00% | 3.00% | 2.75% | 2.50% | 2.50%* | |
 | 3.00% | 2.75% | 2.25% (-50bps) | 2.25% | 2.25% | 2.25% |
 | 3.00% | 2.75% | 2.50% | 2.25% | 2.25% | 2.75% |
 | 3.00% | 2.75% | 2.25% | 2.00% | 2.00% | |
 | 3.00% | 3.00% | 3.00% | 3.00% | 3.00% | 3.00% |
 | 3.00% | 3.00% | 2.75% | 2.50% | 2.25% | 2.25% |
Updated: February 10, 2025
Other findings from the BoC Market Participants Survey
Other findings from the poll of 28 market participants include:
Real GDP growth:
- The median forecast for Canada’s real GDP growth by the end of 2025 is 1.8%, with a slight increase to 1.9% by 2026.
- The strongest upside risk to Canada’s growth outlook is a stronger housing market, with 82% of respondents selecting this option.
- The biggest downside risk is increased geopolitical risks, identified by 50% of those polled.
Recession probability:
- The median probability of a recession occurring in the next 6 to 12 months is estimated at 25% to 30%, with similar projections extending to the 12- to 24-month horizon.
Inflation forecasts:
- A majority of respondents expect annual CPI inflation to remain around 2.0% in 2025, 2026, and extending through the next five years.
Bond yields and CAD:
- The median 5-year Canadian bond yield forecast for 2025 is 2.88%, with projections for the 2-year at 2.60%.
- The Canadian dollar is expected to hover around US$0.72 to US$0.73 by the end of 2025, with similar levels anticipated in 2026.
bank of canada rate forecasts canadian mortgage rates Editor's pick interest rate forecast Market Participants Survey rate trends
Last modified: February 11, 2025
