Although the economy returned to growth last quarter, spare capacity continues to accrue, and we expect CPI inflation to return to the 2% target by the third quarter. That leaves scope for the Bank of Canada to cut interest rates sharply from the current 5.0% to 3.5% by the end of 2024 and 3.0% in early 2025. We expect looser policy to help drive a recovery in GDP growth to 2.5% in 2025, from 0.7% this year.
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