The Bank of Canada provided base-case economic projections under assumptions about trade arrangements over the projection horizon. But to help explain how Governing Council thought about and weighed the risks, the Bank’s MPRs supplemented the base cases. The MPRs described the various channels through which economic activity could be affected by abrupt changes in trade policies and in the level of policy-related uncertainty.
Trade policy uncertainty was two-sided. Because the uncertainty itself was weighing on demand, agreement on future trade arrangements between regions could reduce the drag on economic activity, providing an upside risk to growth.