Possibility of the Bank of Canada raising its growth forecast in 2023

The Bank of Canada is likely to raise its 2023 growth forecast. The BoC raised its 2023 growth forecast to 1.4%, up from the 1.0% it forecast in January, and said annual growth would reach 2.3% in the first quarter before averaging below 1.0% for the rest of the 2023 calendar year.

The central bank stated in its quarterly monetary policy report that inflation should decline quickly to about 3% by mid-2023, but it will not reach the 2% target until the end of 2024, adding that “quarterly growth is expected to be weak during the rest of the year, then it will gradually recover until 2024.”

The bank said potential output growth is expected to rise to 2.3% in 2023 from 1.4% in 2022 and lowered its growth forecast for 2024 to 1.3% from 1.8% in January, and said the economy would grow by 2.5% in 2025.