Assessing the US and Canadian neutral rates: 2025 update

This note presents Bank of Canada staff’s current assessment of the US and Canadian neutral rates of interest. The neutral rate is where the Bank expects the policy rate would settle once output is at its long-run potential level and inflation is at target, after the effects of all cyclical shocks have faded (Mendes 2014). The Bank does not target the neutral rate, but it is an important input for the Bank’s economic projections.

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Publication Details

Journal
Bank of Canada Research
Published
2025-06-06
DOI
https://doi.org/10.34989/san-2025-16
Primary Topic
Demographic Trends and Gender Preferences
Type
article
Field-Weighted Citation Impact
0.00
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article

Assessing the US and Canadian neutral rates: 2025 update

Bank of Canada Research
Demographic Trends and Gender Preferences
article

Assessing the US and Canadian neutral rates: 2025 update

article en

Abstract

This note presents Bank of Canada staff’s current assessment of the US and Canadian neutral rates of interest. The neutral rate is where the Bank expects the policy rate would settle once output is at its long-run potential level and inflation is at target, after the effects of all cyclical shocks have faded (Mendes 2014). The Bank does not target the neutral rate, but it is an important input for the Bank’s economic projections.

Bank of Canada Research
Bank of Canada (CA)
Decent work and economic growth
Openalex Percentile: Top 47%
Demographic Trends and Gender Preferences
DOIOpen Access PDFOpenAlex
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Assessing the US and Canadian neutral rates: 2025 update · Bank of Canada Research (2025) | TGRS Research Map | TGRS