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Poloz has said he expects the damage from a drop in oil will start to be overshadowed in the second half of this year as “positives” including stronger U.S. demand for Canadian goods move to the forefront.

In the bank’s own forecasts accompanying its April 15 rate decision, the outlook for first quarter growth was cut to zero, while the second quarter projection was increased to 1.8 per cent, and the following quarter’s forecast to 2.8 per cent. The bank said the economy will return to full capacity around the end of next year.

The bank’s forecasts are still more optimistic than the median among economists, which see 1.6 per cent growth this quarter and 2.1 per cent the next, according to the latest Bloomberg survey.

“He recognizes there’s going to be some weakness in the Canadian economy, but he’s saying its going to be front loaded,” Dimino said by phone from New York. “If things go as they’re saying, and the output gap does close around the end of 2016, it seems reasonable they would start hiking before that.”

After pricing in a second rate cut since the January reduction, traders have now almost completely discounted the possibility in banker’s acceptances contracts, a predictor of rates. Contracts due December 2015 reached 1 per cent this month, the first time they haven’t implied any more rate cuts since Jan. 21. So-called Bax contracts have settled about 20 basis points above the central bank’s target rate on average since 1992, data compiled by Bloomberg show. The yield has averaged 0.91 per cent this year.

“The economists are just following the markets,” said James Dutkiewicz, who oversees $19 billion as chief investment strategist at Sentry Investments Inc. in Toronto.