Canada’s economy poised to decelerate in 2026

After bringing down its overnight rate to 2.25% last October, the Bank of Canada suggested that its policy rate is now “at about the right level”. Markets have bought into the central bank’s argument, expecting no cuts to the policy rate through the whole of next year. We’re skeptical about that narrative given the significant downside risks that threaten to turn a 2026 economic slowdown into something worse. We unpack all of that in this edition of the Economic and Financial Market Update and explain the potential implications for inflation, interest rates, and the Canadian dollar.

GDP revisions push up 2025, but weak handoff threatens 2026

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