The Economics department at the Toronto Dominion Bank believes borrowing costs are likely to to fall in 2007, as central banks in Canada and the U.S. are forced to drop their key lending rate in response to slowing economies. Here’s the highlights from the bank’s quarterly economic forecast:
- U.S. economy slowing to sub-2% quarterly pace over the next two quarters
- Canadian economy clearly bearing the scars of slowdown south of the border
- Net exports to shave 1.3 percentage points off real GDP growth in 2007
- Canadian real GDP likely to hold at or below 2% until the second quarter of 2007
- Central banks on both sides of the border won’t be able to remain on the sidelines in 2007
- In the first half of 2007, we expect 75 basis points in cuts from the Federal Reserve and 50 basis points from the Bank of Canada