CAD — BOC Monetary Policy Report

The Bank of Canada Monetary Policy Report is the Governing Council's quarterly assessment of Canadian and global economic conditions. Published four times a year alongside selected policy-rate decisions, it presents the Bank's base-case projections for inflation, real GDP, potential output and the output gap, together with the principal upside and downside risks. The analysis explains how demand, supply, wages, productivity, financial conditions and the exchange rate feed into the inflation outlook.

The MPR is not a separate interest-rate decision. Its projections are conditional on assumptions about commodity prices, foreign growth, fiscal policy, population and financial conditions, and they are surrounded by uncertainty. Traders focus on changes to the forecast path, the estimated amount of excess supply or demand and the balance of risks versus the previous Report.

There is no standard Actual-versus-Forecast number for the event. A higher inflation track, stronger demand or less economic slack can lift Canadian yields and CAD if it implies a firmer policy path. Downgrades to growth or greater downside risks can do the opposite. The reaction depends on what was already priced and on the accompanying rate statement and press conference.

Forecast revisions do not equal policy commitments, and mechanical comparisons can be misleading when assumptions change. Read the tables, uncertainty discussion and alternative scenarios, then compare them with subsequent data. The Bank targets 2% CPI inflation, the midpoint of a 1% to 3% control range, but does not react mechanically to one projection.

Official source: Bank of Canada, Monetary Policy Report.