TD Economics: Canada - What Might Have Been
This weeks data releases and Bank of Canada (BoC) statement describe a world that could have been, with a domestic backdrop that showed signs of easing inflation. The war in Iran has upended that. With escalatory strikes on energy infrastructure this week, WTI oil prices are holding at $94 (as of the time of writing). All the focus is now on how big and persistent the energy shock will be with the prospect of stagflation looming.
It is unfortunate that households and businesses will face this new pinch, because this mornings retail sales data sent some positive signals. Real volumes posted a solid gain in January, taking the three-month gain to 7.7% (annualized) and Februarys preliminary estimate of the nominal figure showed another solid month could be expected. After a year of fits and starts, it looks like things were just starting to turn a corner. The expected surged in gasoline and energy prices in March will muddy the picture and likely eat into the real spending figures in the months ahead.
https://economics.td.com/ca-weekly-bottom-line
Bank of Canada maintains policy rate at 2¼%
The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
The war in the Middle East has increased volatility in global energy prices and financial markets, and heightened the risks to the global economy. The breadth and duration of the conflict, and hence its economic impacts, are highly uncertain.
Prior to the war, the global economy was on pace to grow at around 3%, as expected in the January Monetary Policy Report (MPR). Economic growth in the United States has moderated but remains solid, driven by consumption and strong AI-related investment. US inflation remains above target and has evolved largely as expected. In the euro area, domestic demand is supporting growth while exports have contracted. Chinas economy continues to be boosted by strength in exports, but domestic demand remains weak.
Since the outbreak of the conflict in the Middle East, global oil and natural gas prices have risen sharply, and this will boost global inflation in the near-term. In addition to energy supply disruptions, transportation bottlenecks stemming from the effective closure of the Strait of Hormuz could impact the supply of other commodities, such as fertilizer. Financial conditions have tightened from accommodative levels. Global bond yields have risen, equity market prices have declined, and credit spreads have widened. The Canada-US dollar exchange rate has remained relatively stable.
https://www.bankofcanada.ca/2026/03/fad-press-release-2026-03-18/
CMHC Beyond Toronto and Vancouver: Affordability challenges spread across Canadian cities
While housing costs ease slightly nationally, they remain near historic highs in Ottawa, Montral and Halifax
For years, weve heard that housing affordability in Canada has hit rock bottom. Despite some recent improvements, the new CMHC Housing Affordability Composite Index, launched today, shows it remains a major challenge. But this blanket statement overlooks how much housing affordability has eroded in Ottawa, Montral and Halifax in recent years.
Its clear the crisis is no longer limited to Toronto and Vancouver.
Housing affordability is shaped by several factors, not only how much housing is costing. It also includes having enough income to pay rent or a mortgage. It depends on supply and demand factors that determine how easy or hard it is to find a housing unit at a given price. In addition, it considers discretionary income that can be used to make space for a greater housing budget.
While many housing affordability indexes exist in Canada, most are based on a single indicator, resulting in an incomplete picture of the issue. Many also focus only on homeownership affordability, overlooking the rental housing market segment. This approach misses a key component of housing in Canada and the potential interactions between the rental and homeownership market segments.
https://www.cmhc-schl.gc.ca/observer/2026/beyond-toronto-vancouver-affordability-challenges-spread-across-canadian-cities
