The economy faces a period of weak growth as US tariffs and uncertainty over the future of the USMCA weigh on exports and investment. We forecast quarterly GDP growth of less than 1% annualised on average for the rest of 2025. Tariff effects mean core inflation is likely to be close to 3% for the rest of the year but, as it becomes clear that those tariffs are not having second-order effects, we expect the Bank to resume cutting interest rates and lower the policy rate to 2.25%.
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