The Bank of Canada’s July 2026 Monetary Policy Report projects that economic growth in Canada will pick up after a weaker-than-expected start to the year. GDP growth is expected to be slightly stronger in 2027 and 2028, according to the central bank’s projections. The outlook reflects expectations that the Canadian economy will gradually recover from the soft patch experienced in the first half of the year, supported by improving global conditions and the resilience of the domestic economy. However, risks to the outlook remain, including the potential for further trade disruptions and geopolitical uncertainties that could weigh on economic activity.
Headline inflation in Canada has risen above 3 per cent, but the Bank of Canada expects inflation to ease in the coming months if oil prices and gasoline refinery margins decline as assumed. The central bank’s projections are based on the oil price futures curve as of July 9, 2026, and on an assumed narrowing in gasoline margins. The Bank of Canada continues to monitor inflation developments closely and has indicated that it will adjust monetary policy as needed to achieve its inflation target. The central bank’s goal is to bring inflation back to the 2 per cent target, which it expects to achieve by early 2027.
The Canadian economy has faced a number of challenges in recent months, including the trade tensions with the United States, which have created uncertainty for businesses and consumers. The latest round of tariffs announced by the Trump administration would affect a wide range of Canadian products, and the threat of further tariffs has weighed on business investment and consumer confidence. The Bank of Canada has been monitoring the situation closely and has indicated that it stands ready to adjust monetary policy if the trade disruptions threaten the economic outlook.
