The 0.6% annualised decline in fourth-quarter GDP was not as bad as it looked, with most of the drag coming from weaker inventory building, whereas domestic demand growth rebounded to more than 2%. The latest flash monthly GDP estimate for January was also disappointing, but that was probably partly weather-related. Accordingly, while GDP is on track to underperform the Bank of Canada’s expectations again this quarter, the probability of renewed interest rate cuts has risen only marginally.
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