The Bank of Canada published the second-quarter 2025 Market Participants Survey, based on questionnaire responses from about 30 financial market participants collected from June 25 to July 3, 2025. Respondents’ median forecasts point to modest real GDP growth through end-2025 and inflation near 2%, alongside a broadly negative assessment of the output gap and a non-trivial probability of recession over the next year. Median real GDP growth forecasts were 0.8% at end-2025 and 1.8% at end-2026, while the average probability distribution placed 21.4% on growth below zero at end-2025 and 6.5% at end-2026. The most cited upside risks were easing of trade tensions and larger-than-expected fiscal stimulus (both selected by 89% of respondents), while the leading downside risk was an increase in trade tensions (89%), followed by weaker consumer spending and a weaker housing market (44% each). Most respondents (84.6%) characterized the output gap as negative and none as positive. The median probability of recession was 35% in 0 to 6 months and 30% in 6 to 12 months, falling to 25% in 12 to 18 months and 20% in 18 to 24 months. Headline CPI inflation was forecast at a 2.2% median for end-2025 and 2.0% for end-2026 and five years ahead, with the highest average probability weight on inflation between 2.01% and 3.00% at both horizons (45.5% at end-2025 and 45.1% at end-2026).

Original source View in tracker