Policy flexibility limits downside economic risks

We anticipate only a modest pick-up in the growth rates of exports and business investment, which will be more than offset by the impact of an outright decline in residential investment and slower consumption growth. After growing by 1.7% this year, GDP growth should slow to 1.5% in 2014 and 2015. Under these circumstances, the Bank of Canada’s next move will be to introduce an easing bias, possibly followed by an interest rate cut at some point.