By Leah Schnurr and Anu Bararia
OTTAWA/BENGALURU (Reuters) - One rate cut is probably enough for the Bank of Canada, which is no longer expected to follow up January's surprise move and instead is likely to see if the economy recovers after a rough start to the year, a Reuters poll showed.
The latest consensus forecast from economists marks a shift from a Reuters poll in February, when most anticipated the central bank to trim rates once more by midyear.
The median forecast of about 40 economists found rates would stay at 0.75 percent through the first half of next year. They expect the next move to be a rate hike, to 1 percent in the third quarter of 2016, ending next year at 1.25 percent.
BoC Governor Stephen Poloz recently said the economic damage from the collapse in oil prices could occur mostly in the beginning of the year.
That suggests that, while analysts expect the central bank is expected to lower its forecast of 1.5 percent growth for the first quarter, it will look past that slowdown since oil has now stabilized and is seen rising gradually later this year. [O/POLL]
For now, Canadian inflation remains low, part of a global trend accentuated by the tumble in oil prices. Inflation sank to a one-year low of 1 percent in January, the bottom of the BoC's target range, and held there in February.
The bank cut rates to 0.75 percent after keeping them on hold for more than four years, calling it "insurance" against the economic damage from the more than 60 percent drop in the price of oil, one of Canada's major exports.
While the BoC was one of many global central banks that sprang a surprise policy easing around the start of the year, the move took markets completely off guard and hit the Canadian dollar, which has fallen 8 percent so far this year.
"You only take out insurance once," said Deutsche Bank Canada Chief Economist John Clinkard. "The situation at this point does not warrant taking out additional insurance."
Economists put the odds at 90 percent that the central bank would hold rates steady at its next meeting on April 15.
Still, the possibility of another cut remains, and analysts are wary of being caught off-guard again.
Analysts saw a 40 percent probability that the next move by the bank would be a cut, compared with a 55 percent likelihood that it would raise rates.
"If the numbers don't show signs of improvement in the second quarter, there is a risk they will be talking about easing again," said David Sloan, senior economist at 4Cast in New York.
Another rate cut, though, could encourage already-overextended households to borrow more, a major risk to an overheated housing market that some fear is on the verge of a price correction.
Having found a floor after a steep fall, analysts expect oil prices to stabilize and then rise in 2016, with U.S. crude increasing about $15 a barrel to average $66.50 next year.
Economists cited a further drop in oil prices or economic weakness that extends into the second quarter as the two most likely triggers for another rate cut, while several also pointed to economic contraction in the first quarter.
(Polling by Anu Bararia; Editing by Ross Finley and Lisa Von Ahn)