BoC MPR: Raises 2026 GDP forecast to 1.0% from 0.7%, 2027 and 2028 GDP raised to 2.0% from 1.8%

Table 2 – Contributions to Average Annual Real GDP Growth Component 2025 2026 2027 2028 Consumption 1.3 (1.3) 1.3 (0.9) 1.0 (0.8) 1.1 (0.6) Housing 0.0 (0.0) –0.1 (–0.2) 0.1 (0.1) 0.0 (0.2) Government 0.8 (0.8) 0.5 (0.5) 0.7 (0.8) 0.6 (0.5) Business Fixed Investment 0.0 (0.0) 0.2 (0.2) 0.5 (0.2) 0.4 (0.2) Subtotal – Final Domestic Demand 2.1 (2.1) 1.9 (1.4) 2.3 (1.9) 2.1 (1.5) Exports –0.5 (–0.5) 0.8 (0.5) 0.4 (0.6) 0.7 (0.8) Imports 0.1 (0.1) –0.9 (–1.0) –0.6 (–0.6) –0.8 (–0.7) Inventories 0.0 (0.0) –0.8 (–0.2) –0.1 (–0.1) 0.0 (0.2) GDP 1.9 (1.9) 1.0 (0.7) 2.0 (1.8) 2.0 (1.8) Memo Items (Percentage Change) Item 2025 2026 2027 2028 Range for Potential Output 2.3 (2.3) 0.8–1.6 (0.8–1.6) 0.8–1.8 (0.8–1.8) 1.0–2.0 (1.0–2.0) CPI Inflation 2.1 (2.1) 2.9 (2.5) 3.1 (2.0) 2.2 (2.1) Table 3 – Summary of Quarterly Projection for Canada Year / Quarter CPI Inflation (YoY %) Real GDP (YoY %) Real GDP (QoQ % annualized) 2026 Q1 2.2 (2.2) 0.1 (–0.1) 0.3 (–0.1) 2026 Q2 3.0 (3.0) 1.1 (0.8) 3.3 (2.5) 2026 Q3 3.0 (2.5) 1.2 (0.7) 2.0 (1.5) 2026 Q4 3.4  1.6  0.8  2025 Q4 2.2 (2.2) 0.7 (0.7) — 2026 Q4 3.4 (2.4) 1.6 (1.4) — 2027 Q4 2.6 (2.0) 2.2 (1.9) — 2028 Q4 2.1 (2.1) 2.0 (1.8) — Output Gap The output gap is estimated to range from -1.25% to -0.25% in the third quarter, in line with the July Report Neutral Estimate The nominal neutral interest rate in Canada is assumed to be at the midpoint of its estimated range of 2.25% to 3.25% (unchanged)