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Canada’s economy faces two significant shocks—the plunge in global oil prices and the impact of the COVID-19 pandemic.

The Canadian economy continues to evolve as expected. Average quarterly growth was subdued in 2025, weighed down by US tariffs and slowing population growth. CPI inflation remains near the 2% target.

Businesses’ expectations for the pace of economic activity over the next 12 months remain positive, although somewhat less so than in the winter survey.

Supplemental questions on the appreciation of the Canadian dollar - April 2004

Supplemental questions on the appreciation of the Canadian dollar - February 2004

Firms overall remain positive about the economic outlook.

Three major developments are affecting the Canadian economy: the protracted weakness in the U.S. economy; ongoing turbulence in global financial markets; and sharp increases in the prices of certain commodities — particularly energy. The first two developments are evolving roughly in line with expectations outlined in the April Monetary Policy Report.

The outlook for the Canadian economy is evolving largely as anticipated. Economic growth is expected to average around 1¼% over the projection horizon, and inflation remains near 2%.

To begin, as a little background I would like to quickly review the framework within which we conduct Canada's monetary policy. The Bank of Canada Act calls on us to mitigate "fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada."

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on March 12, 2025.