The Bank of Canada will not cut interest rates again until this fall, says a new Deloitte report.

“While interest rates were hiked at a rapid clip from March 2022 to July 2023, our forecast assumes the pace will be much more gradual,” said Deloitte in its spring economic forecast.

The central bank reduced its key overnight lending rate to 4.75% from 5% in early June. Deloitte anticipates that the BoC will make its next rate cut in September and another one in December.

Cuts will continue into 2025 before the rate settles at a neutral level of 2.75 at year-end 2025, predicts the financial services advisory firm.

“This forecast assumes that inflation will continue to gradually decrease over the next few quarters and then return to the 2% target by the second quarter of next year, says the report.

The June 2024 cut will only have a gradual effect on the commercial real estate investment market, say industry leaders. But the market is starting to see increased momentum that is expected to spur more activity as further cuts are introduced.

For a rare time, the BoC has taken a divergent path on interest rates from the U.S. Federal Reserve. BoC Governor Tiff Macklem has softened his former hard-line stance on cuts.

But the Fed has taken a more hawkish approach and signalled that it could introduce hikes designed to control inflation.

Pictured: Bank of Canada Governor Tiff Macklem