Multiple rate cuts this year unlikely: CIBC CEO
Canadian Imperial Bank of Commerce chief executive Victor Dodig doesn't expect a flurry of interest rate cuts any time soon.
“I've never been of the view that there'll be multiple cuts this year,” he said after the bank's annual general meeting at its Toronto headquarters.
Dodig said he does think that economic conditions will soon merit action by the Bank of Canada and other central banks, citing rising unemployment and slower year-overyear wage growth, as well as inflation edging closer to the two per cent target. While policymakers probably won't wait for that goal to be reached before cutting rates, he said, their reductions are unlikely to be particularly aggressive.
“I think we're going into a world where the back half of this year is likely to see a rate cut — maybe two — in these major developed economies like Europe, Canada and the United States,” Dodig said.
Dodig's comments reflect growing doubts about how quickly borrowing costs will fall in 2024, given better-than-expected growth and rising uncertainty about the path of inflation. Still, his predictions are at odds with the median estimate of
economists in last month's Bloomberg survey, who expect 100 basis points of cuts by the Bank of Canada's December meeting. Traders in overnight swaps are pricing in between 50 and 75 basis points of cuts by that time.
But views vary elsewhere. Federal Reserve Bank of Minneapolis president Neel Kashkari said Thursday that rate cuts may not be needed this year if progress on inflation stalls, especially if the economy remains robust.
No matter what happens with cuts this year, “Canadians have been responsible in adjusting” to the current interest-rate environment, Dodig said.