Market Participants Survey—Fourth Quarter of 2023

Results of the fourth-quarter 2023 survey conducted from December 18 to 29, 2023.

The Market Participants Survey results are based on questionnaire responses from about 30 financial market participants. You can view the latest quarterly data here.

Economic scenario

1.1 What is your forecast for real GDP growth (year-over-year percentage change) in Canada?

1.1 What is your forecast for real GDP growth (year-over-year percentage change) in Canada?
GDP growth in Canada
(year-over-year % change)
End of 2024
(n = 26)
End of 2025
(n = 25)
25th percentile of responses 0.5 2.0
Median of responses 0.8 2.2
75th percentile of responses 1.1 2.6

Note: Respondents were asked to calculate the four-quarter (year-over-year) growth rate based on the end of Q4. GDP is gross domestic product.

1.2 What is the probability of real GDP growth in Canada being in each of the following ranges at the end of 2024 and 2025?

1.2 What is the probability of real GDP growth in Canada being in each of the following ranges at the end of 2024 and 2025?
GDP growth in Canada,
average probability in each range (%)
Range of GDP growth End of 2024
(n = 24)
End of 2025
(n = 24)
Below 0.00% 22.9 5.9
0.01% to 1.00% 39.4 15.9
1.01% to 2.00% 26.8 32.3
2.01% to 3.00% 8.3 31.1
3.01% to 4.00% 1.8 11.7
4.01% to 5.00% 0.6 2.2
Above 5.01% 0.3 1.0

Note: GDP is gross domestic product.

1.3 Please identify up to three upside risks to your growth outlook for Canada.

1.3 Please identify up to three upside risks to your growth outlook for Canada.
Top upside risks Share of respondents (%)*
(n = 27)
Looser monetary policy 66.7
Stronger housing market 51.9
Easing of financial conditions 44.4
Larger than expected fiscal stimulus 44.4

* Share of respondents who selected each risk

1.4 Please identify up to three downside risks to your growth outlook for Canada.

1.4 Please identify up to three downside risks to your growth outlook for Canada.
Top downside risks Share of respondents (%)*
(n = 27)
Weaker housing market 59.3
Tightening of financial conditions 55.6
Lower commodity prices 40.7

* Share of respondents who selected each risk

1.5 How would you characterize the current level of Canadian GDP relative to potential output?

1.5 How would you characterize the current level of Canadian GDP relative to potential output?
Characterization of output gap Percentage of respondents (%)
(n = 27)
Positive output gap (current GDP is greater than potential GDP) 11.1
Negative output gap (current GDP is less than potential GDP) 37.0
No output gap (current GDP is equal to potential GDP) 51.9

Note: GDP is gross domestic product. The output gap is the difference between the current level of Canadian GDP and the level of potential output.

1.6 What is the probability of the Canadian economy being in a recession in each of the following individual time frames?*

1.6 What is the probability of the Canadian economy being in a recession in each of the following individual time frames?*
Probability of a recession in Canada (%)
In 0 to 6 months
(n = 25)
In 6 to 12 months
(n = 24)
In 12 to 18 months
(n = 23)
In 18 to 24 months
(n = 22)
25th percentile of responses 35 30 15 10
Median of responses 48 40 25 18
75th percentile of responses 55 53 35 20

* A recession is defined as two consecutive quarters of negative economic growth, as measured by real gross domestic product.

1.7 What is your forecast for annual total CPI inflation in Canada?

1.7 What is your forecast for annual total CPI inflation in Canada?
Headline CPI inflation in Canada (%)
End of 2024
(n = 27)
End of 2025
(n = 27)
5 years ahead
(n = 26)
25th percentile of responses 2.1 2.0 2.0
Median of responses 2.3 2.1 2.0
75th percentile of responses 2.6 2.3 2.2

Note: Respondents were asked to estimate, based on the end of Q4, the four-quarter (year-over-year) consumer price index (CPI) inflation in Canada.

1.8 What is the probability of annual total CPI inflation in Canada being in each of the following ranges at the end of 2024 and 2025?

1.8 What is the probability of annual total CPI inflation in Canada being in each of the following ranges at the end of 2024 and 2025?
Annual CPI inflation in Canada,
average probability in each range (%)
Range of CPI inflation End of 2024
(n = 24)
End of 2025
(n = 24)
Below 0.00% 2.6 2.0
0.01% to 1.00% 6.9 7.8
1.01% to 2.00% 26.4 32.8
2.01% to 3.00% 43.5 44.5
3.01% to 4.00% 16.8 10.3
Above 4.01% 3.7 2.5

Note: CPI is the consumer price index.

Monetary policy

2.1 What is your forecast for the Bank of Canada’s policy interest rate?

2.1 What is your forecast for the Bank of Canada’s policy interest rate?
Policy interest rate (%)
2024 25th percentile
of responses
Median of
responses
75th percentile
of responses
Number of
responses
January 5.00 5.00 5.00 27
March 5.00 5.00 5.00 27
April 4.75 4.75 5.00 27
June 4.50 4.75 4.75 27
July 4.25 4.50 4.63 27
September 4.00 4.25 4.50 27
October 3.75 4.00 4.25 27
December 3.50 4.00 4.13 27
2025
Q1 3.00 3.50 3.75 25
Q2 2.75 3.00 3.75 25
Q3 2.50 3.00 3.50 25
Q4 2.50 3.00 3.50 25
2026
Q1 2.31 2.88 3.25 22

2.2 How would you describe the balance of risks around your forecast for the Bank of Canada’s policy interest rate?

2.2 How would you describe the balance of risks around your forecast for the Bank of Canada’s policy interest rate?
Balance of risks Percentage of respondents (%)
(n = 27)
Skewed to a higher path 18.5
Skewed to a lower path 40.7
Risks are broadly balanced 40.7

2.3 At what level do you expect the policy rate to peak in the current cycle in Canada?

2.3 At what level do you expect the policy rate to peak in the current cycle in Canada?
Peak level of the policy rate (%)
(n = 27)
25th percentile of responses 5.00
Median of responses 5.00
75th percentile of responses 5.00

2.4 What is your estimate of the long-term nominal neutral rate in Canada?

2.4 What is your estimate of the long-term nominal neutral rate in Canada?
Nominal neutral rate (%)
(n = 25)
25th percentile of responses 2.50
Median of responses 2.50
75th percentile of responses 3.00

Financial assets

3. According to your economic scenario, what is your point estimate for the following?

3. According to your economic scenario, what is your point estimate for the following?
Point estimates
End of 2024 25th percentile
of responses
Median of
responses
75th percentile
of responses
Number of
responses
2-year Canadian bond yield 2.98% 3.43% 3.58% 24
5-year Canadian bond yield 2.95% 3.25% 3.60% 25
10-year Canadian bond yield 3.00% 3.30% 3.60% 25
30-year Canadian bond yield 2.83% 3.30% 3.58% 23
Oil price per barrel (West Texas Intermediate) US$73 US$80 US$84 26
Canadian dollar US$0.73 US$0.75 US$0.77 26
End of 2025
2-year Canadian bond yield 2.60% 3.05% 3.45% 22
5-year Canadian bond yield 2.80% 3.20% 3.55% 23
10-year Canadian bond yield 3.00% 3.34% 3.65% 23
30-year Canadian bond yield 3.05% 3.40% 3.65% 21
Oil price per barrel (West Texas Intermediate) US$75 US$80 US$85 25
Canadian dollar US$0.75 US$0.77 US$0.80 25