Inflation continues to decline gradually in most economies. Higher policy interest rates and tight financial conditions are contributing to slowing global demand growth and easing price pressures, although inflation in services prices is sticky. Global economic growth is slowing. While the US economy has been surprisingly robust, the weakness in China has been more pronounced than expected in the July Report. In Canada, higher interest rates are working to ease price pressures, and consumer price index (CPI) inflation has come down significantly from its peak in June 2022. However, progress toward the 2% target is proving to be slow, and the pace of future declines in inflation remains uncertain. Core inflation has been more persistent than expected. At the same time, demand growth has eased and supply is rising. Evidence suggests that the economy is approaching balance. With supply growing faster than demand, price pressures are expected to gradually moderate further.Economic activity is forecast to be modest through most of 2024, with annual growth in gross domestic product (GDP) just under 1%. As past interest rate increases continue to work their way through the economy, they will weigh on household spending and business investment. Weak foreign demand is also expected to slow export growth. GDP growth is projected to rise to about 2½% in 2025.