Despite the slowdown in fourth-quarter GDP growth, to 1.8% annualised from an upward revised 4.2% in the third quarter, the details on household spending and business investment were more encouraging than we had assumed. These details suggest similar GDP growth can be expected this quarter too. Further ahead, however, we expect weaker housing activity to have serious negative implications for domestic demand growth, eventually prompting the Bank of Canada to cut interest rates.
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