BMO Predicting 2.5% GDP Growth in 2010, Rates to Rise in Second Half

(CBC News – The Canadian Press)

The Bank of Montreal is predicting Canada and the United States will post gross domestic product growth of 2.5% next year. The growth essentially reverses a similar decline this year.

The bank is also predicting that the era of zero interest rates will come to an end just after mid-year in Canada and not soon afterwards in the U.S. However, borrowing costs are expected to remain exceptionally low as central banks will wait until they are absolutely certain the recovery has taken root before hiking aggressively.

Despite the growth, the Bank of Montreal is predicting the jobless rate will still average 10% in the United States and 8.5% in Canada next year.

Inflation, however, is expected to remain subdued, averaging 1.5% in Canada and about two per cent in the United States.