Markets are coming around to the idea that the Bank of Canada will be forced to start cutting rates by late next year, shifting their bets a day after Governor Tiff Macklem and his officials downgraded the growth outlook.

Overnight swap markets are pricing in nearly two 25-basis-point cuts by December 2024, according to data tracked by Bloomberg, a change that follows policymakers’ rate decision and monetary policy report on Wednesday. The central bank held its overnight rate at 5% while forecasting slow growth and a higher near-term level of inflation.