This will be a short one.
I stand by everything I wrote back on February 2, 2025 on the matter. So far this post is aging well.
BoC will drop rates 25bps on March 12, 2025 (to 2.75%) and April 16, 2025 for a 2.5% policy rate after April’s rate cut. Prime will go to 4.7%.
Pay attention to the yield curve – 5yr GoC is at 2.63% and this is going to open up the spigots for more government spending. Prime example – British Columbia today announced their budget, and the year-to-year projected change in debt is $23 billion, on a $84 billion revenue account (page 11, “total debt”).
With this much government spending they can barely keep the economy afloat – and it is going to be the same for the rest of the country. As we know, government spending is rarely directed towards the most productive recipients and the population is going to continue to wonder why their standard of living will continue to decrease.