Bank of Canada to Restore Baseline Projections in October Monetary Policy Report

The Bank of Canada said on Wednesday that it expects to return to publishing a baseline projection for Canada’s economy and inflation in its October Monetary Policy Report, reversing a summer decision to present a range of scenarios amid trade-policy volatility. The central bank’s summary of deliberations for its September policy meeting said members judged that developments around U.S. tariffs had become sufficiently stable to enable a single central forecast.

“Given the relative stability with respect to U.S. tariffs since the July Report, members expected they would be able to present a baseline projection for growth and inflation in the October Monetary Policy Report,” the minutes read. The decision marks an effort by Governor Tiff Macklem and his governing council to reduce forecasting ambiguity that they said had complicated policy signalling through the second quarter.

In July, the Bank stopped publishing a definitive estimate for the economy from the second quarter onward and instead laid out a range of projections tied to alternative paths for U.S. trade barriers. The move reflected a central dilemma for policy makers: higher tariffs can transmit directly into consumer prices and raise inflation, but they can also depress demand and slow growth, creating offsetting pressures for monetary policy.

Restoring a baseline projection has immediate market implications. Investors, businesses and households use the Monetary Policy Report not only for the central bank’s inflation forecast but for the implied path of interest rates. A single, central projection should reduce uncertainty in fixed-income and foreign-exchange markets by providing clearer guidance on the Bank’s assessment of near-term inflationary pressures and output trajectories.

Policy makers will still have to explain the range of risks around that baseline. The minutes emphasised that the tariff shock remained a key uncertainty and that scenario analysis would continue to appear alongside the central forecast. That underscores the Bank’s broader commitment to transparency and conditionality in its forward guidance: it will publish a most-likely path while retaining contingency scenarios should trade or other shocks re‑intensify.

The return to a baseline projection also matters for long-term expectations. The Bank of Canada’s inflation-control framework targets 2 percent inflation; persistent uncertainty or wide forecast bands can complicate the task of anchoring expectations around that midpoint. Economists say clearer central forecasts help households and firms make investment and hiring decisions and can stabilise wage-setting dynamics that feed back into core inflation.

Analysts will watch the October Monetary Policy Report for specifics on the Bank’s core inflation measures, its assessment of slack in the labour market, and any revisions to the output gap. Those elements shape the Bank’s interest-rate calculus even more than short-lived spikes in headline prices. With rate decisions still sensitive to incoming data, the upcoming report is likely to be parsed closely by traders and policy makers alike for signals about the balance of risks heading into the final quarter of the year.