On February 22, Bank of Canada Governor McLham stated that the update to the 2026 monetary policy framework should maintain the 2% inflation target unchanged. The policy update by the Bank of Canada will focus on whether a more comprehensive monetary policy toolbox is needed and how to measure potential inflation levels. The updated Bank of Canada model shows that if the United States implements tariffs, Canada’s output will almost decrease by 3% within two years, which will almost completely erase growth expectations for 2025 and 2026. The model shows that exports will decrease by 8.5% in the year after Trump’s tariffs take effect.
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