**UNSPLASH/PiggyBank**
**The PBO sees the 2023-24 federal deficit at $46.8 billion.**

Canada's parliamentary budget officer is projecting a federal deficit of $46.8 billion for the fiscal year that ended March 31, a higher gap than the $40 billion budgeted by the federal government earlier this year. The budget officer also projected a deficit of $46.4 billion in the current fiscal year, also above budget projections.

The PBO expects the Canadian economy will expand at a tepid 1.1 per cent pace this year, weighed down by the impact of higher interest rates on consumer spending and business investment, according to a report by the Parliamentary Budget Officer.

Growth will pick up next year to 2.2 per cent as borrowing costs ease, the PBO projected, adding that the unemployment rate, which reached 6.7 per cent in August, will remain above 6 per cent until the second half of 2026.

The PBO anticipates the Bank of Canada will gradually reduce its policy rate until it reaches the neutral level of 2.75 per cent in the second quarter next year.