The strong Canadian dollar, which lowered growth in the second half of 2004, is unlikely to strengthen much further. Hence, after the first half of this year, the impact of the CAD appreciation will have done most of its damage. Late this year and into next year, relatively low interest rates should boost growth. Real Gross Domestic Product (GDP) growth will be about 2.9% this year and 3.2% next year.
Retail sales rebounded and new orders for manufacturing goods remains robust. Employment continues to grow. Inflation is tame. Low inflation and moderate growth will keep the BoC on hold until late this year.
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