A look at the changes in the key Bank of Canada forecasts

Here are the key forecast changes (July 2024 → October 2024):

GDP growth:

• 2024: 1.2% → 1.2% (unchanged)
• 2025: 2.1% → 2.1% (unchanged)
• 2026: 2.4% → 2.3% (slight decrease)

CPI Inflation:

• 2024: 2.6% → 2.5% (decrease)
• 2025: 2.4% → 2.2% (decrease)
• 2026: 2.0% → 2.0% (unchanged)

Core Inflation (by Q4):

• 2024: 2.4% → 2.3% (decrease)
• 2025: 2.0% → 2.1% (slight increase)
• 2026: 2.0% → 2.0% (unchanged)

US GDP Growth:

• 2024: 2.3% → 2.8% (significant increase)
• 2025: 2.1% → 2.4% (increase)
• 2026: 2.2% → 2.2% (unchanged)

China GDP Growth:

• 2024: 4.7% → 4.6% (slight decrease)
• 2025: 4.3% → 4.3% (unchanged)
• 2026: 4.0% → 4.1% (slight increase)

Key Commodity Price Changes:

• Oil price assumptions reduced by US$10 per barrel:
  • Brent: US$85 → US$75
  • WTI: US$80 → US$70
  • WCS: US$65 → US$55

Other notable changes:

• Q3 2024 inflation came in 0.2 percentage points lower than expected
• U.S. growth outlook revised up due to stronger consumption, productivity growth, and easier financial conditions
• Near-term China outlook revised down due to persistent property market weakness
• Canadian housing market expected to strengthen due to lower interest rates and recent changes to mortgage insurance rules

USD/CAD was slow to react to the rate cut but has now risen to the highs of the day, up 35 pips to 1.3851.

This article was written by Adam Button at www.forexlive.com.