-- Attention turns to the Bank of Canada's rate decision this week, said TD.
Canada's central bank is scheduled to release its policy statement and new Monetary Policy Report (MPR) on Wednesday.
The BoC is widely expected to stay on hold, stated TD. With the economic fallout from the Iran war still highly uncertain, it would be premature to pivot from a hold, particularly with core inflation still well behaved.
That said, last week's BoC Business Outlook Survey (BOS) points to some upward drift in shorter-term inflation expectations, though long-term measures remain well anchored. The bank expects the BoC to stress its willingness to act as needed to keep expectations anchored.
This week also brings the release of the federal government's Spring Economic Update on Tuesday, pointed out TD.
Last November's budget pegged the FY 2026/27 deficit at a "lofty" 2.0% of gross domestic product. This shortfall would also be at the higher end compared with provincial expectations this budget season, added the bank.
However, this year's outlook for nominal GDP -- which drives government revenues -- will likely be revised up relative to last November. The update may also be light on substantial net new measures, as several had already been announced, like the grocery rebate top-up, according to TD.