We expect GDP growth to be little more than 1% this year as household spending and investment remain subdued amid the immigration crackdown and start of CUSMA renegotiation. Despite soft employment gains, weak labour force growth means the unemployment rate should keep falling. But while headline inflation is likely to remain above target, core inflation is on a path back to 2% by the middle of the year, reducing the pressure on the Bank of Canada to consider interest rate hikes until 2027.
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