OTTAWA, April 29 - The Bank of Canada in its latest quarterly monetary policy outlook nudged higher its estimates for real economic expansion in 2026 and 2027, while setting those projections on the basis of explicit assumptions about U.S. tariffs and future oil prices.
The central bank now anticipates 2026 GDP growth of 1.2%, an upward revision from the 1.1% it published in January. For 2027, the forecast rises to 1.6%, compared with the 1.5% projection made earlier this year. These changes were disclosed in the bank's formal outlook.
The report is anchored to two stated assumptions: that U.S. tariffs remain unchanged and that crude oil prices will decline gradually to $75 a barrel by mid-2027. Those assumptions underpin the trajectory the bank uses to build its multi-year forecasts.
On a quarterly, annualized basis, the bank expects first-quarter growth in 2026 to come in at 1.5%, a downward revision from the 1.8% pace it forecast in January. The institution added that second-quarter annualized growth in 2026 will most likely be 1.5%.
Measured price pressures are also projected to run modestly higher in the near term. The Bank of Canada’s outlook calls for average annual inflation of 2.3% in 2026, up from the 2.0% figure in January’s projection, before easing to 2.1% in 2027. The bank’s policy target for consumer price inflation remains 2.0%.
Context provided in the outlook
- The revisions reflect the bank's updated assessment under the specified assumptions about tariffs and oil prices.
- Quarterly annualized growth rates for the first and second quarters of 2026 are both indicated at 1.5% in the outlook, with the first-quarter figure revised down from January.
- Inflation is forecast to be above the bank's 2.0% target in 2026 before moving closer to target in 2027.
The outlook presents a baseline rather than a forecast that accounts for alternative scenarios; it is conditional on the assumptions stated in the report. Where information in the outlook is limited, the bank’s projections are contingent on those assumptions and on the data and judgments set out in its quarterly document.