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Posted AT 9:18 AM EST on 18/09/08

Economists warn of deflation threat

HEATHER SCOFFIELD

Globe and Mail Update

OTTAWA — The global financial crisis is hampering growth and constraining credit to such an extent that it will drive down inflation in Canada and prompt the Bank of Canada to start cutting rates soon, some economists say. “The deepening of the global financial crisis and associated pressures on global growth and commodity prices are unambiguously deflationary for Canada,” said David Wolf, chief economist at Merrill Lynch Canada.

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