Bank of Canada Cuts 2026 Growth Forecast to 0.7%, Raises Near-Term Inflation Outlook
The Bank of Canada has revised its growth and inflation projections, cutting its 2026 GDP forecast to 0.7% from 1.2% while raising 2027 and 2028 estimates. Inflation is expected to average 2.5% in 2026, up from the previous 2.3%.
The Bank of Canada released updated economic projections, showing a significant downgrade for 2026 growth to 0.7%, down from the 1.2% estimate in its April Monetary Policy Report. However, growth forecasts for 2027 and 2028 were revised upward to 1.8% each, compared with previous estimates of 1.6% and 1.7%, respectively.
On a quarterly basis, annualized Q2 2024 GDP is now seen at 2.5%, up sharply from the 1.5% projection in April, while Q3 growth is expected to moderate to 1.5%.
Inflation projections were also adjusted: the average CPI is forecast at 2.5% in 2026 (vs. 2.3% in April), then easing to 2.0% in 2027 (vs. 2.1%) and 2.1% in 2028 (vs. 2.0%). The revisions reflect a mixed economic outlook with near-term inflation remaining above target.
Source: First Squawk