Bank of Canada to Resume Economic Forecasts with 'Humble' Approach Amid Persistent Trade Uncertainty

Central Bank Reinstates Formal Projections

The Bank of Canada is set to resume publishing formal economic forecasts, with its next projection scheduled for release on October 29, 2025, coinciding with its upcoming interest rate decision. This marks a return to the central bank's traditional practice, which had been paused since the beginning of the year due to significant economic uncertainties. Governor Tiff Macklem made the announcement on October 17, 2025, from Washington, D.C., where he was attending the International Monetary Fund's (IMF) annual meetings.

'Humble' Approach to Forecasting

Governor Macklem stated that the central bank will adopt a 'humble' approach to its renewed forecasting efforts, placing considerable emphasis on potential risks. This cautious stance is primarily driven by persistent global trade uncertainty. While the immediate concerns around the U.S. tariff campaign have somewhat receded since the spring, broader threats to global trade endure. Macklem specifically highlighted the potential for an escalation in trade tensions between China and the United States as a 'very significant' global risk.

Domestically, the focus of uncertainty has shifted towards the upcoming review of the Canada-U.S.-Mexico Agreement (CUSMA), which is slated for next year. This agreement currently ensures that the majority of Canadian goods can enter the United States without tariffs. The unpredictability surrounding U.S. trade policy had previously led the Bank of Canada to forgo a single definitive economic estimate, instead presenting a range of scenarios based on alternative trade barrier paths.

Impact on Business and Upcoming Data

Surveys conducted by the central bank indicate that ongoing uncertainty has deterred Canadian businesses from making new investments and hiring. However, Macklem noted that the rapid growth of artificial intelligence (AI) has emerged as a 'countervailing force,' stimulating investment, particularly in the United States.

In preparation for its upcoming forecast, the Bank of Canada will analyze two crucial sets of data next week:

• Its own quarterly surveys of business and consumer expectations.
• Statistics Canada's report on September inflation.

The central bank's monetary policy has recently seen adjustments, including a quarter-point interest rate cut last month, partly in response to a softening labour market. The current target for the overnight rate stands at 2.75%. The reintroduction of formal forecasts aims to provide clearer guidance to markets and households, assisting them in making investment and hiring decisions amidst a complex economic landscape.