Oxford Economics Expects Canada Core CPI to Remain Below 2% Through End of 2026

According to Oxford Economics, Canada's core inflation rate is expected to remain below 2% through the end of 2026. Economist Michael Davenport attributed the forecast to excess idle capacity in the economy, slower population growth, and uncertainty related to U.S. trade policy, Middle East conflicts, and AI deployment. The Bank of Canada would need to see "clear evidence of broadening inflation" and rising long-term inflation expectations to raise rates this year. Oxford Economics initially forecasts the central bank will increase its policy rate by 0.5 percentage point in the first half of 2027, though Davenport noted this depends on the success of trade negotiations between the U.S. and Canada.
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