Inflation dynamics and pressures

• Beating the “pros” with a semi-structural model of their own inflation forecasts

  Staff working paper 2026-11 Sergio A. Lago Alves, Waldyr Dutra Areosa, Carlos Viana de Carvalho

  How can Surveys of Professional Forecasters (SPF) be used to improve inflation forecasts? By using US historical quarterly data on SPF forecasts, we provide better understanding of how we can use forecast disagreement to improve our own forecasts.

  Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C11, C5, C53, E, E3, E31, E37 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting

• AI Paradox: Promise vs. Reality—What It Means for Monetary Policy

  Staff analytical paper 2026-4 Joshua Brault, Maryam Haghighi, Jing Yang

  This note reviews the emerging evidence on AI’s labour-market and productivity effects, highlighting early task-level impacts, sizable micro level productivity gains, and the macroeconomic challenges these pose for monetary policy during the transition.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E2, E24, E3, E31, E5, E50, E52, E58 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Structural challenges, Digitalization and productivity

• Monetary Policy Under Okun’s Hypothesis

  Staff working paper 2026-3 Felipe Alves, Giovanni L. Violante

  The current monetary policy framework of the Fed intends to be more ’inclusive’ by running the economy hot for longer during expansions.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E24, E3, E31, E32, E5, E52, J, J2, J24, J6, J64 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission

• Assessing the Buy Canadian movement one year later

  

  Sparks at Bank article Olga Bilyk, Jacob Dolinar

  Canada and the United States have both benefited from decades of free trade. But US tariffs significantly changed this relationship, and Canadians reacted. In our research, we explore the Buy Canadian sentiment one year after it emerged and measure how much it has shifted travel patterns and spending in grocery stores.

  Content Type(s): Staff research, Sparks at Bank article Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, International trade, finance and competitiveness

• Channels of Transmission: How Mortgage Rates Affect House Prices and Rents in Canada

  Staff analytical paper 2026-2 Nishaad Rao, Tao Wang

  We use Canadian data to examine how monetary policy affects house prices and the consumer price index for rent through exogenous changes in the mortgage interest rates. It finds that the price and rent impacts operate through various channels and that these impacts vary by region.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E3, E31, E5, E52, R, R2, R21 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission

• The trade conflict hasn’t derailed supply chains. Here’s why.

  

  Sparks at Bank article Raheeb Dastagir, Louis Poirier

  Global supply chains have been working well despite abrupt shifts in US trade policy and rising global tensions in 2025. A big reason for this is that companies have improved how goods are shipped and warehoused to keep products flowing around the world. But these supply chains could be tested even more if the trade conflict worsens.

  Content Type(s): Staff research, Sparks at Bank article Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, Digitalization and productivity, International trade, finance and competitiveness

• Housing and the Long-Term Real Effects of Changes in Trend Inflation

  Staff working paper 2026-1 James (Jim) C. MacGee, Yuxi Yao

  An economy with fixed amortization mortgages and borrowing-constrained consumers leads to the level of inflation targeted having real effects on home ownership, consumption, and debt. Using a life-cycle housing tenure choice model, we show that by front-loading real mortgage payments, higher inflation lowers steady-state home ownership and the mortgage-debt-to-income ratio.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E5, E50, G, G5, G51, R, R2, R21 Research Theme(s): Financial system, Monetary policy, Inflation dynamics and pressures

• Understanding the resurgence of food inflation in 2025

  

  Sparks at Bank article Olga Bilyk

  Inflation in grocery prices picked up in 2025, largely due to rising cost pressures that emerged in late 2024 and worked their way through supply chains. Compared with the cost pressures experienced during the COVID‑19 pandemic, these have been more limited, narrower in scope and more commonly tied to imported items.

  Content Type(s): Staff research, Sparks at Bank article Research Theme(s): Monetary policy, Inflation dynamics and pressures

• The Sectoral Origins of Post-Pandemic Inflation

  Staff working paper 2025-37 Jan David Schneider

  This paper quantifies the contribution of sector-specific supply and demand shocks to personal consumption expenditure (PCE) inflation. It derives identification restrictions that are consistent with a large class of dynamic stochastic general equilibrium models with production networks.

  Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C50, E, E3, E31, E32 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures

• Inflation Expectations in Action: Exploring Agents’ Behaviour in a Period of High Inflation

  Staff discussion paper 2025-18 Naveen Rai, Hayley Touchburn, Matt West

  Inflation expectations are important to monetary policy decision-makers. Using survey evidence, we examine how firms and consumers react to their inflation expectations during the post-pandemic period of high inflation.

  Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C8, C83, D, D8, D84, E, E3, E31 Research Theme(s): Monetary policy, Inflation dynamics and pressures