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Canadian economic activity is evolving largely as expected. Inflation is now near the middle of the Bank of Canada’s control range of 1% to 3%.

Results from the autumn Business Outlook Survey indicate that business sentiment improved slightly, but regional differences are more pronounced. Positive views in Central Canada contrast with widespread weakness in the Prairies.

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on October 29, 2025.

t the time of the April Monetary Policy Report, it was evident that a robust economic recovery was underway in Canada.

Results from the Business Outlook Survey and the Business Leaders’ Pulse reveal that firms’ outlooks and intentions remain subdued despite a gradual improvement in sentiment. Expectations for growth in domestic and export sales are still soft. Most firms do not plan to increase staffing, and investment intentions are restrained. While businesses continue to expect cost increases from tariffs and trade uncertainty, weak demand limits their ability to pass these costs through to prices. One-year-ahead inflation expectations remain below the peak reached earlier in the trade conflict.

The outlook for Canadian economic growth in 2026 and 2027 is evolving generally as anticipated. Inflation is expected to increase in 2026 due to higher gasoline prices caused by the war in the Middle East. It will then ease in 2027 as oil prices are assumed to moderate.

Results from the winter Business Outlook Survey suggest that business sentiment is broadly positive except in the Prairies, where indicators remain weak. In aggregate, firms’ outlook is supported by expectations of healthy domestic and foreign sales.

In the April Monetary Policy Report, the Bank noted that inflation was well above its 2 per cent target and that short-term inflation expectations had edged up.

Growth has slowed in many emerging-market economies (EMEs) since the 2007–09 global financial crisis, reflecting both cyclical and structural factors. In this context, it will be in-creasingly important for EMEs to raise potential growth by maintaining steady progress on structural reforms. How do structural reforms generally support growth? What are the re-form priorities for EMEs over recent history and today? Finally, what will be the impact of planned structural reforms on potential output growth among the world’s larger EMEs? These are some of the questions considered by the authors.