Mortgage relief on the horizon: Economists say we could see a rate cut triple the size of previous cuts on Wednesday

With the economy sputtering, the Bank of Canada will almost certainly try to give it some life by drastically slashing interest rates this week, economists and traders agree.
“It’s a very weak economy right now, and the unemployment rate came up fairly rapidly,” said Pedro Antunes, chief economist at the Conference Board of Canada.
While the Bank has cut its key overnight lending rate by 25 basis points — a quarter of a percentage point — three straight times, it’s set to cut it by at least 50 basis points Wednesday morning, or as much as 75, said CIBC chief economist Avery Shenfeld.
The overnight rate is now at 4.25 per cent, well above what the Bank has said it believes to be the “neutral” rate — a theoretical target which neither encourages nor restricts growth, said Shenfeld. There’s no time like the present for deeper cuts, he added.
“If a 3.5 per cent or lower overnight rate is appropriate for three months from now, it’s hard to see why it wouldn’t be even better to get there sooner, in order to shorten the wait for its impacts to kick in,” Shenfeld wrote in a research note.
The Bank has said publicly it believes a neutral rate would be anywhere between 3.25 to 2.25 per cent.
The Bank raised rates 10 times between March 2022 and last summer in a bid to wrestle inflation down to its two per cent target. Inflation peaked at 8.1 per cent in June 2022 as the Canadian economy opened back up from COVID-related restrictions.