OTTAWA, July 15 (Reuters) - The Bank of Canada on Wednesday slashed its growth forecast for 2026, citing in part weaker government spending, but said the economy would be slightly stronger than expected in 2027 and 2028.
In its quarterly monetary policy report, the bank said 2026 growth would be just 0.7%, down from the 1.2% it had forecast in April. It said growth in both 2027 and 2028 would be 1.8%, up from 1.6% and 1.7% respectively.
On an annualized basis, the bank said second quarter growth was 2.5%, up from the 1.5% predicted in April. Third quarter annualized growth would be 1.5%, it said.
Annual inflation in 2026 will average 2.5%, up from the 2.3% predicted in April, before declining to the central bank's 2.0% target in 2027.
(Reporting by David Ljunggredn, editing by Promit Mukherjee) ((Reuters Ottawa bureau, +1 647 480 7921; david.ljunggren@tr.com))