TD Securities strategists expect the Bank of Canada’s (BoC) April Monetary Policy Report (MPR) to embed significantly higher Oil assumptions, with Brent at USD 90 and West Texas Intermediate (WTI) at USD 85, versus a prior USD 55 WTI baseline. They see this driving a temporary rise in headline Consumer Price Index (CPI) toward 3% in Q2 2026 before easing back toward 2% by end‑2027.

Higher Oil assumptions lift Canadian inflation path

"We look for the April MPR to incorporate a $90/$85 assumption for Brent/WTI crude, which corresponds with the average price since January 28th. That sits slightly below our baseline view for $92 WTI in Q2 and $85 by year-end, but marks a large jump from the previous assumption for $55 WTI."

"That will translate to a sharp acceleration to the Bank's inflation forecasts, with headline CPI peaking just below 3% in Q2 before slowing into year-end. We expect those forecasts to maintain a return to 2% by the end of 2027, with more modest upward revisions to core inflation measures."

"The growth impact of higher oil prices could be addressed in more depth with a stand-alone box in the April MPR, but we remain of the view that higher prices are beneficial to economic activity in Canada."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)