- Prior was 2.25%
- BOC says “the labour market is soft”
- The Bank’s outlook assumes tariffs remain unchanged and the global
benchmark price of oil declines to US$75 per barrel by mid 2027 - China’s economy is being supported by robust exports. In the euro area,
higher prices for oil and natural gas will weigh on economic activity - Overall, the global economy is expected to grow by about 3% in 2026, 2027 and 2028
- Projections for inflation over the next year are revised up because of the jump in energy prices
- Consumer and government spending are supporting economic activity, while
tariffs and trade uncertainty are weighing on exports and business
investment - The Bank’s April forecast projects GDP growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028
- ” We are closely monitoring the impact of the conflict in the Middle East
and how the economy is responding to US tariffs and trade policy
uncertainty” - “Governing Council is looking through the war’s immediate impact on
inflation but will not let higher energy prices become persistent
inflation” - “We stand ready to respond as needed”
This is how the BOC sees inflation evolving:
CPI inflation will likely rise further in April to about 3%. Based on
the assumption that oil prices will ease, inflation is forecast to come
down to the 2% target early next year and remain around 2% over the
projection horizon.
The market is pricing in 40 bps in rate hikes this year. The Bank of Canada is in a tough place with inflation rising but the jobs market worsening. The unusually blunt language on jobs is concerning.
This article was written by Adam Button at investinglive.com.
