Key insights
- The Bank of Canada revised its growth forecasts upward for 2026 and 2027, assuming stable U.S. tariffs and declining oil prices. While seemingly localized, the assumptions regarding US tariffs could indirectly influence US equities, particularly those with significant trade exposure to Canada. The slightly increased inflation forecast could also influence the Fed's thinking.
OTTAWA, April 29 (Reuters) - The Bank of Canada on Wednesday slightly lifted its growth forecasts for 2026 and 2027 on the assumption that U.S. tariffs remain unchanged and oil prices gradually decline to $75 a barrel by mid-2027.
In its quarterly monetary policy outlook, the bank said 2026 growth would be 1.2% compared to its 1.1% forecast in January and 2027 growth would be 1.6%, up from 1.5%.
On an annualised basis, first quarter growth in 2026 was 1.5%, down from the 1.8% predicted in January. Second quarter annualized growth will most likely be 1.5%. the bank said.
Annual inflation in 2026 will average 2.3%, up from the 2.0% forecast in January, before declining to 2.1% in 2027, added the bank, which targets 2.0% inflation.