Highlights
In its quarterly Monetary Policy Report, the Bank of Canada forecast that Canada's GDP would grow 2.8 percent at an annualized pace in the January-March quarter (data due on May 31), revised up from 0.5 percent growth projected in January. Its first estimate for April-June GDP is a solid 1.5 percent rise.
The Canadian economy expanded 0.2 percent on quarter, or an annualized 1.0 percent, in the October-December quarter, averting two consecutive quarters of contraction, as net export and consumer spending gains offset declines in housing and capital investment. The economy then grew 0.6 percent on the month in January, beating the median forecast, and Statistics Canada expects a further 0.4 percent rise in February.
This has led the bank to revise up its 2024 GDP growth forecast to 1.5 percent from 0.8 percent projected about three months ago. The bank expects the economic growth to accelerate to 2.2 percent in 2025, but it was revised down from its previous forecast of 2.4 percent. The bank's first estimate for 2026 is 1.9 percent growth.
The bank's latest consumer inflation outlook for 2024 is 2.6 percent, down from its previous projection of 2.8 percent. The consumer price index rose 3.9 percent in 2023 after soaring 6.8 percent in 2022 and rising 3.4 percent in 2021.
As for the CPI in 2025, the bank forecast the annual inflation rate will remain just above the target at 2.2 percent, unchanged from 2.2 percent projected in January. The bank's CPI estimate for 2026 is 2.1 percent, roughly at its target.
Canada's overall consumer inflation eased to 2.8 percent in February from 2.9 percent in January after accelerating to 3.4 percent in December from 3.1 percent in November. It had moderated to 2.8 percent in June 2023, which was the lowest since 2.2 percent in March 2021 and a sharp drop from a recent peak of 8.1 percent hit in June 2022.
BoC officials are monitoring the persistence in underlying inflation, which is"more of a concept than a measure" and reflects many factors, such as the bank's own core inflation measures, prices excluding energy and the number of items whose prices are still rising more than 3 percent on year.
The core CPI measures that strip out most of the shelter components were still running above 3 percent, whether on a 12- or three-month basis, Governor Tiff Macklem said last month. Since his remarks, the year-over-year increase in the CPI trim has eased further to 3.2 percent in February from 3.4 percent in January while the annual rate of the CPI median slowed to 3.1 percent from 3.3 percent, but they are still above 3 percent.
The Canadian economy expanded 0.2 percent on quarter, or an annualized 1.0 percent, in the October-December quarter, averting two consecutive quarters of contraction, as net export and consumer spending gains offset declines in housing and capital investment. The economy then grew 0.6 percent on the month in January, beating the median forecast, and Statistics Canada expects a further 0.4 percent rise in February.
This has led the bank to revise up its 2024 GDP growth forecast to 1.5 percent from 0.8 percent projected about three months ago. The bank expects the economic growth to accelerate to 2.2 percent in 2025, but it was revised down from its previous forecast of 2.4 percent. The bank's first estimate for 2026 is 1.9 percent growth.
The bank's latest consumer inflation outlook for 2024 is 2.6 percent, down from its previous projection of 2.8 percent. The consumer price index rose 3.9 percent in 2023 after soaring 6.8 percent in 2022 and rising 3.4 percent in 2021.
As for the CPI in 2025, the bank forecast the annual inflation rate will remain just above the target at 2.2 percent, unchanged from 2.2 percent projected in January. The bank's CPI estimate for 2026 is 2.1 percent, roughly at its target.
Canada's overall consumer inflation eased to 2.8 percent in February from 2.9 percent in January after accelerating to 3.4 percent in December from 3.1 percent in November. It had moderated to 2.8 percent in June 2023, which was the lowest since 2.2 percent in March 2021 and a sharp drop from a recent peak of 8.1 percent hit in June 2022.
BoC officials are monitoring the persistence in underlying inflation, which is"more of a concept than a measure" and reflects many factors, such as the bank's own core inflation measures, prices excluding energy and the number of items whose prices are still rising more than 3 percent on year.
The core CPI measures that strip out most of the shelter components were still running above 3 percent, whether on a 12- or three-month basis, Governor Tiff Macklem said last month. Since his remarks, the year-over-year increase in the CPI trim has eased further to 3.2 percent in February from 3.4 percent in January while the annual rate of the CPI median slowed to 3.1 percent from 3.3 percent, but they are still above 3 percent.
Definition
Since 2009 the Bank of Canada (BoC) has regularly updated its economic view via a quarterly Monetary Policy Report. This presents base-case projections for inflation and growth in the Canadian economy as well as an assessment of the risks. The forecast provides a platform upon which the monetary authority can base its decisions with regards to any changes in official interest rates (and/or unconventional monetary instruments).
Description
Each quarter, the MPR gives the financial markets a view of the BoC's governing council thinking. This provides important guidance especially since the BoC does not publish minutes from its policy setting meetings. The report is released at the same time as the policy announcement is made.
