Forecasting oil prices: What works best and when Sparks at Bank article Reinhard Ellwanger Oil price forecasts help central banks assess risks to inflation and economic activity. Forecasters often rely on the latest price of oil, on futures markets or on economic models. The best approach depends on how far ahead forecasters are looking and whether they need only a forecast or also an explanation of what’s behind it. Content Type(s): Staff research, Sparks at Bank article Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
How Do Import Tariffs Affect Aggregate Prices? Theory and Evidence from Canada Staff working paper 2026-36 Christian Bustamante, Xing Guo, Lu Han, Soyoung Lee, Gaelan MacKenzie, Mariel Yacolca Maguiña, Jacob Short Using Canadian firm-level market shares and an oligopolistic model, the paper shows that a 25% counter-tariff on U.S. imports raises Canada's aggregate price index by 0.66%, far below direct cost pass-through predictions due to consumer substitution and markup adjustments. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E31, F, F1, F13, F14, L, L1, L11, L16 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, International trade, finance and competitiveness
The Production Network Amplification of Retaliatory Tariffs Staff working paper 2026-35 Christian Bustamante, Xing Guo, Lu Han, Soyoung Lee, Gaelan MacKenzie, Mariel Yacolca Maguiña, Jacob Short We develop a framework to quantify how tariff changes on imported goods affect sectoral and aggregate consumption prices through direct and production-network channels. Using Canada's input-output matrix and administrative firm-good import data for the universe of Canadian firms, we estimate price elasticities for tariffs on U.S.-imported goods. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D5, D57, E, E3, E31, F, F1, F13, F14 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, International trade, finance and competitiveness
Prima: The Bank of Canada’s New Projection and Policy-Analysis Model—An Overview Staff analytical paper 2026-47 Donald Coletti, Martin Kuncl, Martin Harding, Dmitry Matveev, Tolga Özden, Yang Zhang Prima is the Bank of Canada’s new model for projection and policy analysis. It builds on the economic foundations of earlier Bank models, adding detail on how sectoral pressures affect production costs and their pass-through to consumer prices. Content Type(s): Staff research, Staff analytical paper JEL Code(s): C, C4, C43, C8, C82, E, E3, E30, E31, E37 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Sector-based producer price indexes: New measures of producer price pressures in Canada Staff analytical paper 2026-46 Yena Joo, Ali Rouhghalandari, Vivian Chu, Xin Ha Producer price indexes measure changes in the prices that producers receive for their outputs or that they pay for their inputs. Statistics Canada publishes a range of producer price indexes for specific products and industries. For the first time, these series have been combined into a small set of broad sectoral measures. Content Type(s): Staff research, Staff analytical paper JEL Code(s): C, C4, C43, C8, C82, E, E3, E30, E31, E37 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Why asking rents have surged in Canada since 2021 Sparks at Bank article Benjamin Straus Renting has become significantly more expensive in Canada in recent years. Asking rents—those advertised for vacant units—rose sharply as demand grew faster than supply. As tenants move and sign new leases, changes in asking rents gradually spread to the average rents captured in the consumer price index. Content Type(s): Staff research, Sparks at Bank article Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, Demographics and labour supply
The budget pressures faced by different households since 2020 Sparks at Bank article Yaz Terajima Although inflation has come down from pandemic highs, many households are still feeling the effects of higher prices. Between 2020 and 2025, younger and lower-income households generally saw spending outpace income gains while older and higher-income households fared better. Together, these differing experiences meant income gains for the average household kept up with higher spending. Content Type(s): Staff research, Sparks at Bank article Research Theme(s): Monetary policy, Inflation dynamics and pressures
Labor Markets, Financial Crises, and Inflation: Jobless and Wageless Recoveries* Staff working paper 2026-31 Guillermo Calvo, Emilio Colombi, Fabrizio Coricelli, Pablo Ottonello We document the macroeconomic patterns that characterize labor market recovery from financial crises. Using a sample of postwar recession episodes from around the world, we show that financial crises are typically followed by jobless recoveries, with a sluggish recovery in employment relative to output. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E3, E31, E4, E44, F, F3, F32 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Climate Change and Monetary Policy: Navigating Physical Risks Staff analytical paper 2026-44 Tatjana Dahlhaus Weather-related disasters can reduce output while increasing inflation, creating difficult trade-offs for monetary policy. This note reviews evidence on the macroeconomic effects of physical climate risks and uses a structural model to assess how more frequent and severe disasters could shape future monetary policy challenges. Content Type(s): Staff research, Staff analytical paper JEL Code(s): C, C6, C68, E, E1, E12, E3, E31, E5, E52, F, F4, F41, Q, Q5, Q54 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Structural challenges, Climate change
Segmented Inflation Dynamics (SID): Identifying Trend Inflation from the Price Index Staff analytical paper 2026-43 André Binette, Colleen Smith This note presents Segmented Inflation Dynamics (SID), a data-driven tool for assessing trend inflation. SID uses time-series segmentation to divide the price index into contiguous segments with stable inflation rates. Based on data through December 2025, SID indicates that Canada’s trend inflation has been near 2 percent since early 2024. Content Type(s): Staff research, Staff analytical paper JEL Code(s): C, C2, C22, E, E3, E31, E5, E52 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures