The Governing Council met from October 20 to 28, 2026, under Governor Tiff Macklem, to discuss the monetary‐policy decision slated for October 28. Members reviewed staff briefings on global and domestic developments before reaching a consensus on the outlook.
Globally, the Council noted that higher oil prices – about US$35 per barrel above the July Report assumptions – have kept inflation elevated in many economies, while growth has been stronger than expected thanks to AI‐related investment in the United States and parts of Asia. Despite these gains, the euro area and other oil‐importing regions face slower growth in the second half of the year.
In Canada, real GDP expanded 3.3% in the second quarter, and recent indicators point to a roughly 2% growth rate for the third quarter. Consumer spending remained solid, underpinned by rising per‐person consumption, labour‐income growth and household‐wealth gains. The unemployment rate hovered around 61⁄2%, reflecting sideways labour‐market dynamics.
Higher energy prices have pushed total CPI inflation to about 3% since April, while core inflation stays near the 2% target. The Council now expects CPI inflation to reach 31⁄2% at the end of 2026, stay above 3% through much of 2027, and gradually decline to the 2% goal by mid‐2028. Cost pressures from fuel, non‐energy imports and AI‐related equipment are expected to filter into consumer prices over time.
Growth expectations were revised upward: the Council projects 1% real GDP growth for 2026 and 2% for both 2027 and 2028. Business investment is anticipated to accelerate, driven by AI adoption and higher oil‐and‐gas spending, although trade‐policy uncertainty with the United States poses a downside risk. Residential investment is expected to stay weak due to slow population growth, affordability constraints and higher mortgage rates.
Members debated whether a higher policy interest rate is needed to curb the risk that persistent energy costs could become broadly embedded in inflation. While core inflation remains near 2%, the Council highlighted that the prolonged energy shock has increased the risk of a broader, more persistent inflationary environment.
Overall, the Council concluded that the improved growth outlook reduces slack in the economy, but the combination of a higher‐for‐longer oil price scenario and resilient activity raises the likelihood that inflation could stay above target for an extended period.