The Bank of Canada published its third-quarter 2026 Market Participants Survey, showing expectations for higher policy interest rates alongside easing inflation and modestly stronger economic growth in 2027. The median policy rate forecast was 2.50% for December 2026, rising to 2.75% in March 2027 and remaining there through the end of 2028. Risks around the projected rate path were skewed upward for 52% of respondents, while none reported a downward skew.
Median forecasts put annual consumer price index inflation at 3.0% at the end of 2026 and 2.0% at the end of 2027. Real gross domestic product growth was projected at 1.6% and 1.8%, respectively, measured over the four quarters ending in each year's fourth quarter. Despite the expected growth, 92% of respondents assessed current Canadian output as below its potential level.
Trade tensions dominated the risks to the growth outlook. Easing tensions were an upside risk for 88% of respondents, while the same proportion identified increasing tensions as a downside risk. Larger fiscal stimulus than expected was another leading upside risk, selected by 72%. Tighter monetary policy and tightening global financial conditions were each cited as downside risks by 52%.