BOC flagged a key upside inflation risk is firms passing higher input costs onto
consumers. It warned its productivity estimate may be weaker than previously
assumed, implying a smaller output gap and greater inflationary pressure.
Downside risks to inflation include a potential tightening of global finance
conditions and a weaker-than-expected domestic recovery. The BOC projects Brent
will decline to about $70/bbl by end-2027, based on the July 9 futures curve and
slightly below its April forecast, while noting the oil outlook is highly
uncertain. Policymakers raised export projections, partly reflecting increased
energy-related activity.
