CIBC is expecting the Bank of Canada to accelerate and deepen interest-rate cuts, Bloomberg reported.

The lender expects the central bank to reduce its benchmark rate by 50 basis points at each meeting in December and January.

“It really is time to declare victory in the battle against inflation and get the economy moving again,” Avery Shenfeld, CIBC’s chief economist, told Bloomberg. “There’s no reason not to speed up the process of getting interest rates down materially.”

CIBC revised its forecast amid concerns about accelerating labour market and economic growth weakness, according to the news agency.

The forecast change comes amid mounting concerns that Canada’s labor market and growth are weakening at a quicker pace than expected.

“Rates are now too high for the economy’s own good and [the BoC] can afford to front-load some of their reductions,” Shenfeld told Bloomberg.

BoC Governor Tiff Macklem has softened his stance on interest-rate hikes since the outset of 2024. But 50-bps cuts would be would differ from the BoC’s recent trend of 25-bps reductions.

The central bank made three 25-bps cuts in June, July and August, reducing its overnight lending rate to 4.25%. Those reductions followed a prolonged period of hikes and holds.

National Bank also anticipates a 50-bps cut before year-end 2024 and believes that the overnight lending rate will fall to 2.75% in 2025 before the BoC ends its monetary easing cycle, according to Bloomberg.

The 2.75% mark represents the midpoint of a so-called neutral rate at which borrowing costs do not increase or hamper economic growth, the Bloomberg report states.

Steven Poloz, a former BoC governor, told BNN Bloomberg Television that the BoC might have a case for cutting rates deeper than midpoint “if the downside risks do build up more” to cushion the economy.

Although Poloz does not anticipate a recession, he did not dismiss the possibility.

“We should be prepared for one, not pretend it can’t happen,” he told BNN Bloomberg Television.

In August, Veronica Clark, a Citibank economist, told Bloomberg that she expects the BoC to introduce a 50-bps cut in October.

But Canada’s other top lenders expect Macklem to maintain the 25-bps reduction method. The BoC views interest-rate cuts as a way to help reduce inflation to the targeted 2% range.

“With services inflation excluding shelter still elevated, a continued slowdown in services spending helps reduce the risk of renewed upward pressure on services prices,” wrote Maria Solovieva in a research note published Friday. “This provides peace of mind for the Bank of Canada in sticking with its course.

“We expect the Bank [to] continue cutting its [policy] rate in October, with another reduction in December, bringing the rate down to 3.75% by year-end.”

TD expects the BoC to reduce rates by a further 175 bps through the end of 2025.

Pictured: Bank of Canada Governor Tiff Macklem