The Bank of Canada will reassess its economic growth forecasts after the federal government announced a 21% reduction in immigration targets for the following year. The central bank recently cut its policy rate by 50 basis points and projected 2.1% GDP growth for next year, alongside increased household consumption. The revised immigration goals set newcomers at 395,000 in 2025 and 380,000 in 2026, down from approximately 485,000 in 2024. As Bank governor Tiff Macklem indicated, lower population growth could lead to diminished GDP growth. While the central bank initially accounted for a slowdown, Statistics Canada now anticipates a 0.2% decline in population growth over the next two years. Despite these changes, Macklem noted that the immigration cuts are unlikely to significantly impact inflation forecasts, as population growth influences both demand and supply.
