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Canada's Economy Off To a "Slightly Better-Than-Expected" Start in 2026, But That Won't Move BoC On Rates, says TD Bank

BY MT Newswires | ECONOMIC | 03/31/26 10:01 AM EDT

10:01 AM EDT, 03/31/2026 (MT Newswires) -- Canada's economy looks to be off to a "slightly better-than-expected" start in 2026 after a "lackluster" Q4 2025, says TD Bank in looking at the key implications of today's GDP data release.

TD adds with January's print and a flash estimate for February, Q1 2026 growth is "tracking in line with historical trend growth", a view shared by both it and Bank of Canada. "It's worth noting that quarterly expenditure-based GDP growth has been particularly volatile due to sharp movements in trade and inventories, something not well captured in the monthly industry GDP accounts."

Tuesday's data shouldn't impact the BoC's next policy decision on April 29, according to TD. Instead, TD says, the recent United States-Iran war is keeping the BoC more forward-looking, with the economic outlook highly dependent on how long and severe the conflict becomes.

TD expects the BoC will closely monitor this shock -- weighing downside risks to growth against the upside inflationary impacts -- and stand ready to respond. For now, TD maintains its view that the BoC has reached the end of its interest rate easing cycle.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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