08:42 AM EDT, 10/24/2024 (MT Newswires) -- The Bank of Canada showed that it means business when it says it is trying to stoke demand to absorb the slack that threatens to keep inflation below target, said Bank of Montreal (BMO).

Lower rates not only have a direct impact on borrowing and spending they also have an indirect effect via higher home and equity prices and a weaker currency, noted the bank.

After a challenging 2023 and the first half of 2024, BMO's in-house measure suggests financial conditions are turning "supportive" and could add nearly one percentage point to real gross domestic product growth in 2025.

This assumes the BoC shifts back to a 25bps rate-cut cadence through mid-2025 and home prices recover "modestly," added the bank.