The threat of US tariffs will hang over the economy for the foreseeable future, weighing on confidence and reducing investment. We have therefore revised down our GDP growth forecast for 2025 to 1.5%, from 1.8%. We still expect the Bank of Canada to cut interest rates twice more, down to 2.50%. But a 25% tariff would complicate matters, given the Bank would look to support growth against a backdrop of higher inflation due to retaliatory tariffs and a weaker loonie.
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