INFLATION DOWN. INTEREST RATES MOVE DOWN, TOO.

The annual inflation rate came in at 1.8% for December, with some economists projecting it will fall to 1.1% for January. A lower inflation rate brings the overall interest rate in line. The Canadian economy (as measured by GDP) shrunk 0.2% in October, and economists believe interest rates will fall to 5.5% in the next few quarters.

Forecasts have predicted that the BoC would cut the Key Rate by 125 basis points by the middle of this year, which would bring the Key Rate to 2.5%.