Canadian GDP growth projected at 1.3 percent for 2026
Financial market participants surveyed by the Bank of Canada in June 2026 forecast Canadian real GDP growth of 1.3 percent for 2026 and 1.9 percent for 2027. The median respondent expects total CPI inflation to reach 2.6 percent by the end of 2026 before easing to 2.1 percent in 2027.
Policy rate and inflation outlooks
Survey respondents project the Bank of Canada's policy interest rate to remain at 2.25 percent through December 2026, before rising to a median of 2.75 percent by the end of 2027.
Headline CPI inflation is expected to average 2.6 percent at the end of 2026 and 2.1 percent at the end of 2027, stabilizing at 2.0 percent five years ahead.
Meanwhile, real GDP growth is forecast at a median of 1.3 percent for 2026 and 1.9 percent for 2027.
A vast majority of 96 percent of participants characterize the current Canadian output gap as negative, while the median probability of a recession within 12 months stands at 25 percent.
Risks tilt toward trade and tightening
Participants identified trade tensions as a dominant factor in their economic outlook.
Specifically, 92 percent cited an easing of trade tensions as a top upside risk, while 96 percent pointed to an increase in trade tensions as the primary downside risk.
Additionally, 65 percent noted a tightening of global financial conditions as a key threat.
Regarding monetary policy risks, 40 percent of respondents view the balance of risks around the policy rate path as skewed higher, compared to 28 percent skewed lower and 32 percent broadly balanced.
Cautious optimism on rates
The survey highlights a consensus that policy easing will pause before a gradual return toward neutral rates.
However, heavy reliance on external trade dynamics leaves the outlook highly vulnerable to protectionist shocks.
For financial markets, the narrow band of rate expectations signals limited room for pleasant surprises.