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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n\n\n\n\n
The Canadian dollar has weakened against the U.S. dollar amid the trade tensions, with the currency hitting a one-week low as yield spreads widened. The depreciation of the loonie makes Canadian exports more competitive but also increases the cost of imports, which could feed into inflation. The Bank of Canada will be watching the currency’s performance closely, as a sustained decline could complicate the central bank’s efforts to bring inflation back to target. The central bank has also been monitoring global economic developments, including the impact of geopolitical tensions on energy prices and global trade.<\/p>\n\n\n\n
The Canadian Federation of Independent Business has projected that private investment will weaken, even as GDP is expected to grow in the second and third quarters of 2026. The weak investment outlook reflects the uncertainty created by the trade tensions, as businesses delay capital expenditure decisions until the trade situation becomes clearer. The combination of trade uncertainty and weak investment could dampen the economic recovery and make it more difficult for Canada to achieve its growth potential. The Bank of Canada has emphasized the importance of supporting investment and innovation to ensure sustained economic growth.<\/p>\n\n\n\n
The Bank of Canada remains committed to its mandate of maintaining price stability and supporting economic growth. The central bank will continue to monitor economic developments closely and adjust monetary policy as needed to achieve its objectives. The outlook for the Canadian economy remains positive, with growth expected to pick up in the coming years. However, the risks to the outlook, including the trade tensions with the United States, warrant careful monitoring and a flexible approach to monetary policy.<\/p>\n","protected":false},"excerpt":{"rendered":"
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