Highlights of the Bank of Canada economic forecasts from Monetary Policy Report

Bank of Canada monetary policy report forecasts:

CPI (Consumer Price Index): Sees higher inflation in 2024 and 2023 to remain elevated at 3.7%

  • 2023 CPI: Projected at 3.7%, matching consensus expectation (BoC’s previous forecast was 3.5%).
  • 2024 CPI: Projected at 2.5%, above consensus expectation of 2.3% (BoC’s previous forecast was 2.3%).
  • 2025 CPI: Projected at 2.1%, slightly above consensus expectation of 2.0% (BoC’s previous forecast was 2.1%).

GDP (Gross Domestic Product) Growth: Sees higher growth

  • 2023 GDP Growth: Projected at 1.8%, above consensus expectation of 1.3% (BoC’s previous forecast was 1.4%).
  • 2024 GDP Growth: Projected at 1.2%, above consensus expectation of 1.0% (BoC’s previous forecast was 1.3%).
  • 2025 GDP Growth: Projected at 2.4%, significantly above consensus expectation of 1.8% (BoC’s previous forecast was 2.5%).

Neutral Rate/Output Gap:

  • The BoC maintains that the midpoint of the neutral range is within 2-3%, unchanged from previous estimates.
  • The BoC estimates that the output gap is between 0% and 1% in Q2. Previously, the BoC estimated that the output gap was between 0.25-1.25%.

This article was written by Greg Michalowski at www.forexlive.com. Source