Bank of America Global Research discusses its expectations for the BoC policy trajectory in 2023.

"Will the BoC cut rates in 2023? Unlikely, cuts are probably a 2024 story. The Bank of Canada (BoC) clearly signaled a pause at its January meeting (see report), after hiking the policy rate by 25bp to 4.50%. According to the BoC, the pause is conditional on whether the economy evolves in line with its expectations. The BoC sees inflation reaching 3% by mid-year, which we see as optimistic. This means that in the short-term risks for the policy rate remain to the upside," BofA notes. 

"Our baseline scenario is for the BoC to remain on hold for the rest of the year and only start cutting in 2024 (we also expect cuts until 2024 in the US). As the economy decelerates in the following months, risks to the policy rate will switch to the downside," BofA adds.