Bank of Canada adds new U.S. tariffs to baseline forecast
Published · Updated
What happened
The Bank of Canada, in its October 28 rate announcement and Monetary Policy Report, incorporated new U.S. tariffs into its forecast and said those measures are expected to slow Canadian growth in the fourth quarter. The Bank also indicated the weakness should ease later as the economy adjusts.
Why it matters
A central bank baseline changes how governments, firms, and markets anchor near-term expectations for growth, inflation, and sector performance. When tariffs enter that baseline, trade friction is no longer treated only as a policy dispute; it becomes part of the official planning environment for investment, hiring, and fiscal choices.
On October 28, the Bank of Canada said new U.S. tariffs are now built into its baseline outlook and that Canadian growth is expected to slow in the fourth quarter before recovering later. The update came with the Bank's rate decision and Monetary Policy Report, turning tariff effects from a political and sectoral concern into an official macro assumption used for near-term policy planning. That creates a firmer reference point for federal and provincial decisions on exposed industries, regional support needs, and trade-response messaging.
Watch for
Bank of Canada Governor Tiff Macklem statement or testimony on October 29-31 clarifying which U.S. tariffs drive the Q4 slowdown assumption Statistics Canada release or statement by November 1 on September merchandise trade or manufacturing indicators showing tariff-linked weakness in U.S.-exposed sectors Department of Finance Canada or Global Affairs Canada statement by November 1 outlining sectoral mitigation, trade-enforcement, or diplomatic steps tied to new U.S. tariffs Provincial government statements by Ontario or Quebec by November 1 requesting federal support for tariff-exposed manufacturers or exporters
Sources
- Bank of Canada raises the policy rate by 25 basis points to 2½% · bankofcanada.ca
- Monetary Policy Report—October 2026 · bankofcanada.ca
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