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Interest rates are working to moderate spending and inflation is easing gradually, though underlying pressures are proving persistent. The Bank projects that inflation will stay around 3% through the first half of 2024, returning to target in 2025.

Overall, global economic growth continues to evolve as expected. However, the composition of that growth has changed.

The global economy is forecast to grow at around 3% over the projection horizon, in line with its current pace. Inflation remains above central bank targets.

This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

Before the outbreak of the war in the Middle East, the Canadian economy was evolving as expected. Since the war began, oil prices have risen, pushing inflation up, and the outlook has become more uncertain.

The war in the Middle East has driven up inflation worldwide and is weighing on global growth. Uncertainty has risen markedly. US trade policy continues to reshape global trade.

Despite COVID-19 challenges, bold policy measures in Canada have helped businesses manage cash flow pressures and kept insolvency filings low. But the impact of the pandemic has been uneven, and the financial health of some firms may further deteriorate over the next year.

Economic growth has ticked up in Canada, boosted by past cuts in interest rates. In the absence of new tariffs, growth is forecast to strengthen, and inflation remains close to 2%. But the threat of new tariffs is causing major uncertainty.

With geopolitical uncertainty elevated and Canada’s trade agreement with the United States and Mexico under review, risks around the outlook are unusually high.

Governor Tiff Macklem speaks about the Bank of Canada’s monetary policy framework review and the agreement between the Government of Canada and the Bank to renew the 2 percent inflation target.