Weak growth to prompt more aggressive loosening

With the inflation battle all but won, weak GDP growth will force the Bank of Canada into more aggressive action, with a couple of 50bp interest rate cuts to end this year. We expect the Bank to adopt a more measured pace of loosening in 2025, until the policy rate reaches 2.25%. Looser monetary policy should support a recovery in GDP growth to 2.0% in 2025 and 3.0% in 2026, although elections at home and abroad, as well as uncertainty about immigration policy, are risks to the outlook.