The below par 2% rate of Canadian GDP growth over the first half of this year must be a concern for policy makers, particularly when the chances are that growth will slow even further in the second half of this year. Before the end of 2012, we expect the Bank of Canada to drop the language in its policy statements suggesting that interest rates might eventually have to rise. With underlying inflation already subdued, we still think that the next move in the Bank's interest rate this year or next year, if anything, is more likely to be downward.
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