The Bank of Canada published its latest 'Monetary Policy Report' and - compared to the last report published in July - second quarter economic growth was slightly stronger than expected, while the third quarter looks weaker."Gross domestic product (GDP) per person continues to decline," it noted, while"energy exports are rising, and growth in both business investment and government spending is slowing."

The BoC estimates that growth in final domestic demand slowed down to 1.5 percent in the third quarter, down from 2.75 percent in the first half of 2024."This slowdown reflects softening growth in business investment and government spending," it said.

Looking ahead, the Canadian economy is projected to grow by around 2 percent through the first six months of 2025, before picking up the pace to about 2.5 percent in the second half - driven by both stronger consumption and business investment (supported by lower borrowing costs).

Inflation is expected to remain around the BoC's 2 percent target, although"in the coming months, inflation is expected to rise to slightly above 2 percent, mostly reflecting a smaller drag from energy prices."

Core consumer price inflation is forecast to ease gradually.

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).

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.