Market participants will therefore scrutinize the accompanying Monetary Policy Report for updated projections on growth, inflation and the output gap. Sondhi anticipates only modest forecast revisions and a continuation of what he describes as a “cautiously optimistic” narrative for a gradual recovery through 2026, rather than a pronounced acceleration. He also points to the latest Business Outlook Survey, which showed improving sentiment late last year but demand conditions still soft enough to curb firms’ pricing power.
BMO Capital Markets likewise expects a steady policy rate and a continuation of Governor Tiff Macklem’s neutral stance.
Benjamin Reitzes argues that, although some indicators have softened since the December meeting, the shift has not been “material” in the way the Bank has defined as necessary to move off the sidelines. The economist highlights subdued business investment intentions, trade-related uncertainty tied to looming USMCA renegotiations, and a labour market that is starting to show more caution in hiring and an uptick in layoff plans.
On inflation, the picture is complex but generally supportive of patience rather than urgency. BMO points to headline consumer price growth that has been buffeted by tax-related base effects and the reversal of prior policy changes, making the BoC more reliant on its preferred core measures. Those core indicators have been drifting lower on a short-term basis, with six‑month annualized readings for CPI‑trim and CPI‑median near the 2 per cent target.