Bank of Canada: 93% of financial market players think economy is underperforming
The Bank of Canada surveyed financial market players and a vast majority think Canada’s economy is operating below expectations.
Author: Quinn Patrick
The Bank of Canada surveyed financial market players and a vast majority think Canada’s economy is operating below expectations. The central bank’s latest quarterly survey shows a consensus among economists that the nation’s gross domestic product is underperforming.
The Market Participants Survey of 27 financial market participants regarding the performance of the fourth quarter of 2025 found that 93 per cent believe Canada’s GDP was underperforming.
At the Bank of Canada, “market participants” are financial market professionals and institutions like banks, asset managers, insurers, and economists whose views on the economy and markets are surveyed to inform the Bank’s analysis and decisions.
Ongoing trade tensions with the United States were cited as the top economic liability for Canadian business and financial leaders, followed by the tightening of global financial conditions (41 per cent) and weak consumer spending (37 per cent).
The central bank’s findings, published on Monday, also offered a median GDP growth prediction of 1.9 per cent for 2027, slightly lower than the 2 per cent projected in the Liberals’ latest budget.
The survey was conducted between Dec. 16 and Dec. 30, shortly after the Bank of Canada kept its benchmark interest rate at 2.25 per cent. The rate remained in place following its latest announcement on Jan. 28.
The central bank decided to maintain the rate as the economy navigates a period of “structural adjustment,” citing the upcoming joint review of the Canada–United States–Mexico Agreement as a “key source of uncertainty” for the country’s economic growth.
Survey respondents unanimously believe that the policy rate will stay at 2.25 per cent for the rest of the year. The median expectation is that it will be raised to 2.5 per cent next year, and then again to 2.75 per cent in the fourth quarter.
Last month, the Bank of Canada projected the economy to grow 1.1 per cent in 2026 and 1.5 per cent next year “as population growth slows and Canada adjusts to U.S. protectionism.”
Meanwhile, survey respondents estimated the probability of a recession in the next six months to be 20 per cent. The median forecast is that headline inflation will be 2.1 per cent by the end of this year and remain there through to the end of 2027.