PBO Forecasts Slow Growth and Rising Deficit Due to High Interest Rates

PBO projects federal deficit will rise to $46.5B in 2023-24 due to higher interest rates slowing economic growth

Economy expected to stagnate in second half of 2023 and consumer spending to remain weak through mid-2024

Higher interest rates raising debt servicing costs for federal government

PBO forecasts inflation returning to 2% target by end of 2023

Bank of Canada expected to hold interest rate at 5% and potentially begin rate cuts in 2024