As the economy is set for a sustained period of below potential growth and core inflation is on track to return to the 2% target by the end of the year, the Bank of Canada’s June interest rate cut will be the first of many. We expect the policy rate to end the year at 3.75%, down from 4.75% currently, with further loosening in 2025. That should help drive a recovery in GDP growth, from 1.0% this year to 2.0% in 2025 and 2.3% in 2026.
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