OTTAWA, April 10 (Reuters) - The Bank of Canada on Wednesday lifted its growth forecast for 2024 on the back of a strong increase in population and a recovery in household spending and said it still expected inflation to return to target in 2025.
In its quarterly monetary policy report, the central bank said 2024 growth would be 1.5%, up from the 0.8% increase it had forecast in January.
"The outlook for GDP growth is revised up, mainly due to stronger-than-expected population growth in 2024," it said.
It estimated that on an annualised basis the economy had expanded by 1.0% in the fourth quarter of 2023, compared to a January forecast of no growth, and expanded by 2.8% in the first quarter of 2024, sharply up from the January prediction of a 0.5% jump.
Higher gasoline prices are expected to keep overall inflation close to 3% in the second quarter of 2024 before it eases to below 2.5% in the second half of the year and returns to the 2% target near the end of 2025.
The bank left its key policy rate unchanged at a near 23-year high of 5% on Wednesday and said it needed to see evidence that a recent easing in underlying inflation would be sustained before it could consider a rate cut.
(Reporting by David Ljunggren, editing by Promit Mukherjee)
((Reuters Ottawa bureau, david.ljunggren@tr.com, opens new tab))
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