Financial experts flagged trade tensions as the top threat in the Bank of Canada's Q2 survey
Nearly all of Canada's top financial market participants have named rising trade tensions as the primary threat to economic growth, and the survey capturing those views closed before Washington's most aggressive tariff moves arrived.
The Bank of Canada's Market Participants Survey for the second quarter of 2026, released Monday, polled 26 financial experts between June 11 and June 18.
Respondents — drawn from dealers, banks, asset managers, pension funds, insurers, and researchers — offered a picture of cautious optimism shadowed by deepening trade anxiety.
Ninety-six percent of participants listed an increase in trade tensions among the top three downside risks to Canada's economic growth.
Tightening global financial conditions came second at 65%, with 42% naming rising geopolitical risks.
On the upside, 92% identified an easing of trade tensions as the most significant potential growth driver, with 58% pointing to larger-than-expected fiscal stimulus. Decreasing geopolitical risks, stronger consumer spending, and a stronger housing market were each named by 31% of respondents.
| Increase in trade tensions | 96% | |
| Tightening of global financial conditions | 65% | |
| Increasing geopolitical risks | 42% |
| Easing of trade tensions | 92% | |
| Larger-than-expected fiscal stimulus | 58% | |
| Decreasing geopolitical risks | 31% | |
| Stronger consumer spending | 31% | |
| Stronger housing market | 31% |
Source: Bank of Canada Market Participants Survey, Q2 2026. Respondents selected up to three risks. n = 26.
Growth outlook dims before the worst landed
The survey's GDP forecast carries added weight given its timing. The median real gross domestic product (GDP) growth estimate for 2026 came in at 1.3% year-over-year, 0.3 percentage points below the prior May survey, before recovering to a projected 1.9% by end-2027.
The survey closed weeks before the United States announced it would not be renewing the Canada-United States-Mexico Agreement (CUSMA) for another 16 years, triggering rolling annual reviews for up to a decade.
It also predated US President Donald Trump's announcement of a 50% tariff on roughly $20 billion worth of Canadian goods scheduled to take effect August 19.
The Bank of Canada's Monetary Policy Report (MPR), released July 15, projected GDP growth of 0.7% in 2026, rising to 1.8% in both 2027 and 2028.
Rate hold expected, inflation risks linger
Survey respondents placed median inflation expectations at 2.6% by end-2026, dropping to 2.1% by end-2027. Canada's most recent Consumer Price Index (CPI) report pegged headline inflation at 2.8% in June. The median rate forecast held the Bank of Canada's policy rate steady at 2.25% through year-end, rising to 2.75% by end-2027.
While the July 15 MPR removed earlier language about potential consecutive rate hikes, Governor Tiff Macklem confirmed they remain possible if oil prices persist and start feeding into broader goods and services pricing.
Brent crude spiked to US$100 per barrel after Houthi forces attacked two Saudi oil tankers in the Red Sea, the highest in nearly two months, before easing to around US$90 by Monday.
Guatieri, director and senior economist at BMO Capital Markets in Toronto, has told Canadian Mortgage Professional that economic headwinds are keeping buyers away.
With Canada's mortgage market entering the second half of 2026 on cautious footing, the August 19 tariff deadline will be the next critical test of whether those forecasts hold.
The Bank of Canada's next rate decision is scheduled for September 2.
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