Oxford Economics Forecasts Canada Core Inflation to Stay Below 2% for Rest of 2026

Oxford Economics forecast that Canada’s core inflation rate will remain below 2% for the rest of 2026. According to Jin10, economist Michael Davenport said the outlook reflected excess spare capacity in the economy, slowing population growth, and uncertainty for businesses and households tied to U.S. trade policy, conflict in the Middle East, and AI deployment. Davenport said that for the Bank of Canada to raise interest rates this year, it would need to see clear signs of broader inflation in the CPI basket and an increase in long-term inflation expectations. Oxford Economics preliminarily expected the Bank of Canada to raise its policy rate by 0.5 percentage points in the first half of 2027. Davenport said that expectation depended on the success of trade negotiations between the United States and Canada.