Growth in the Canadian economy appears to be firming in the second half of the year. Third quarter real GDP growth is currently tracking at 2.5 per cent on an annual basis and core inflation continues to hover near the Bank's target of 2 per cent. Moreover, the outlook for growth next year may be somewhat brighter than the Bank currently forecasts given the spending intentions of the new Canadian government. If so, some of the burden on monetary policy will be lifted, making further rate cuts less likely. We expect that the Bank will remain on hold through the rest of 2015 and much of 2016, with a chance of tighter monetary policy toward the end of next year.
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