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Does the Bank of Canada rate carry the risk of further damage?

by SuperiorInvest

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David Rosenberg, founder and president of Rosenberg Research, recently told the Financial Post's Larysa Harapyn that he expects a rate cut in the central bank's next announcement in June.

“I think the bank should cut rates at the next meeting,” he said in the video interview. “If they don't, I think that at the next meeting it would be possible to offer some concrete guidance for taking action.”

“The longer they wait, the more they have to do.”

Rosenberg said the economy is currently oversupplied, and in times of oversupply the policy rate has historically been around 2.5 or 3 percent.

“That's as far as the Bank of Canada has to go, and I don't know what the reason would be – I really don't know – why they would be dragging their feet,” he added.

Charles St-Arnaud, chief economist at Central Alberta, echoes Rosenberg's sentiment that further maintenance of interest rates would hurt the economy.

“If (the Bank of Canada) does not make cuts, it would be a matter of extreme caution in our view, rather than suggesting that upside risks to inflation remain a concern,” he wrote in a note to clients earlier this year. week.

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In terms of how many cuts are expected in 2024, Rosenberg predicts that Canadians could see several steps of mortgage relief this year.

“I think the bank should cut rates and cut them more than once,” he said.

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