Oxford Economics expects Canadian core inflation to stay below 2% for the
remainder of 2026, citing spare capacity, slowing population growth and business
and household uncertainty from U.S. trade policy, the Middle East conflict and
AI deployment. Economist Michael Davenport said the BOC would need to see "clear
signs of broadened inflation" across the CPI basket and a rise in long-term
inflation expectations to justify rate hikes this year. Oxford's baseline
anticipates a 50bp BOC policy rate increase in 1H 2027, but Davenport said that
outlook depends on the outcome of U.S.-Canada trade talks.
