On July 15, 2026, the Bank of Canada held its target for the overnight rate at 2.25% and published its July Monetary Policy Report. Its tone was more positive: “Canada’s economy is showing signs of improvement.”
Bank of Canada July 2026 forecast: GDP growth
Key points
- Growth resumed in the second quarter, estimated at 2.5%. The Bank projects 0.7% growth for 2026 and 1.8% in both 2027 and 2028.
- CPI inflation rose to 3.2% in May, mostly because of gasoline; excluding gasoline it was 2.2%. Inflation is expected to return to around 2% in early 2027.
- Unemployment was 6.5% in June.
- “Housing activity has been weak but looks to be stabilizing.”
Governing Council judged that the current rate “remains appropriate to sustain the economic recovery and bring inflation back to the 2% target.”
What it means in Calgary
Business investment is expected to pick up, boosted in the near term by the oil and gas sector, which matters for Alberta’s job market. For mortgage holders, the policy rate has now been unchanged since October 2025, giving a stable base for anyone renewing this summer.
What changed since April
The Bank said global prospects were dented by higher oil prices from the Middle East conflict, although oil prices are below their April peak. It expects global growth to slow to 2.75% in 2026 and recover to about 3.25% in 2027 and 2028. In Canada, financial conditions have eased since April. US bond yields rose while Canadian yields were little changed, which helped weaken the Canadian dollar.
Growth is back, but slack remains
Canada’s GDP data over the past year was choppy, and growth stalled as the economy adjusted to tariffs, high uncertainty and slower population growth. Second-quarter growth of 2.5% largely reflects temporary factors unwinding, but the Bank sees signs that growth is broadening: solid consumer spending, resumed export growth and government spending. Unemployment has hovered in a 6.5% to 7% range since the end of 2024. As the recovery proceeds, the Bank expects economic slack to be gradually absorbed.
The world economy
The US economy is growing at about 2.5%, mostly because of strong consumption and investment. China is expanding solidly on robust exports. The euro area has been weighed down by high energy prices but is expected to strengthen in the second half if energy prices come down. Closer to home, the Canada-US-Mexico Agreement is now subject to annual reviews, but the Bank says more businesses report they are finding ways to navigate the uncertainty, and business investment is projected to pick up modestly.
Inflation: a gasoline story
The jump to 3.2% in May was mainly gasoline. Core inflation measures stayed close to 2%. The Bank expects inflation to stay elevated in June, then ease gradually and average about 2% in 2027 and 2028, although that depends on oil and gasoline prices.
Rates at a glance
With the policy rate at 2.25%, the Bank Rate is 2.5% and the deposit rate 2.20%. Prime rates at the big banks, which follow the policy rate, are unchanged, so variable-rate mortgage payments stay the same after this decision. Governing Council said uncertainty is still high and it is prepared to adjust policy as needed.
What it means for Calgary buyers and owners
- Renewing this summer: the policy rate has been unchanged since October 2025. Compare fixed and variable offers from several lenders; the right choice depends on how much payment certainty you want.
- Buying: stable rates and a balanced resale market give buyers time to compare. Use a rate hold while you shop.
- Alberta’s economy: higher oil prices and oil and gas investment support jobs here, which helps housing demand, especially for detached homes.
- Next decision: September 2.
