Deloitte Canada says the Canadian economy will return to growth in the second half of 2024, with interest rate cuts as early as this spring.

The firm’s economic outlook report predicts stagnant growth during the first half of the year as the effects of higher interest rates continue to work their way through the system.

The Bank of Canada held its key rate steady at five per cent in December after a heavy-handed hiking campaign to fight inflation.

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Interest rates: Bank of Canada governor expects 2024 to be year of ‘transition’

Deloitte says inflation is still uncomfortably high at 3.1 per cent as of November, but it’s unlikely the central bank will hike rates further.

However, Deloitte Canada chief economist Dawn Desjardins says we shouldn’t expect interest rates to return to their pre-pandemic lows.

Desjardins says momentum in the economy and the job market is poised to improve in the second half of 2024 as confidence starts to recover.