Canadian market participants expect the Bank of Canada (BoC) to start cutting its key policy rate from a 22-year high of 5.00 per cent in April 2024, a month later than the previous forecast, according to a survey released by the central bank on Monday.

The survey showed a median of 27 financial participants expect interest rates to drop to 4.00 per cent in the fourth quarter of 2024, up from an expectation of 3.50 per cent in the previous survey released in July.

The survey was conducted from Sept. 20-28 – before official data showed Canada’s annual inflation rate unexpectedly slowed to 3.8 per cent in September and the economy likely slipped into a shallow recession in the third quarter.

A median of market participants expect inflation to drop to 2.2 per cent by end-2024 and the gross domestic product to grow 1.2 per cent in 2024 versus a year earlier. Both unchanged from the previous survey.

The BoC has raised interest rates ten times between March 2022 and July 2023 to cool inflation, which the bank expects to slowly edge down to its 2 per cent target by end-2025.

In new projections released last month, the central bank said it expects economic growth to remain muted until the end of 2024, before growth picks up again 2025.