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📝 Raising Our Year-End Fed Projection by 25bps to 3.50%-3.75%: BMO

Compared to our last Rates Scenario (July 6), we’ve raised our year-end projections for Federal Reserve and Bank of Canada policy rates by 25 bps to the 3.50%-to-3.75% range, in the wake of aggressive moves by both central banks.

However, we still look for the Fed and BoC to remain on hold through next year as they assess the lagged impact of their past tightening actions on inflation. We judge there’ll be enough progress made to forestall further rate hikes but not enough to encourage rate cuts until early 2024. In both economies, we see the key inflation measures still running above 3% by the end of next year. However, the net risk is for even higher policy rates through the turn of the year, resulting in likely recessions and rate cuts commencing in 2023. - BMO


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