BoC MPR: Growth is picking up; Inflation in Canada is expected to ease to about 2.5% in the second half of 2026

• The output gap for the second quarter of 2026 is estimated to be in the range of -1.5% to -0.5%, indicating slightly more excess supply than was anticipated in the April Report (albeit figures unchanged from Q1 estimate)
• The nominal neutral interest rate in Canada is assumed to be at the midpoint of its estimated 2.25% to 3.25% range. (unchanged)

Summary of Projections

Contributions to average annual real GDP growth