2026 - 2030 Surrey Financial Plan

ECONOMIC OVERVIEW

CANADA The Bank of Canada ("BOC") held its key interest rate at 2.25% during its March 2026 meeting, marking the third consecutive meeting in which the central bank has maintained the current rate. Canada’s unemployment rate stood at 6.7%, with a modest gain of 14,000 jobs in March. However, this increase was insufficient to offset job losses from the previous two months, resulting in a net loss of 95,000 jobs in the first quarter of the year. Canada’s Consumer Price Index

("CPI") rose to 2.4% in March 2026, an increase of 0.6% from the month prior. Excluding gasoline, inflation was 2.2%. The increase in March inflation was primarily driven by higher gasoline prices, which rose by 21.2% month-over-month.

Economists expect inflation to continue trending upward, with projections exceeding 3.0% in April of this year.

Source: Bank of Canada

The Governor of the BOC stated that the central bank will look beyond short-term monthly fluctuations and focus on the broader inflation trajectory. The central bank is also seeking to manage expectations, as consumer and business inflation outlooks influence spending and investment decisions. The Bank noted that raising interest rates too quickly could pose downside risks to economic growth, while delaying action could increase the risk of prolonged inflation. As a result, the central bank will continue to balance the risks of slowing economic activity and employment against rising inflation in its upcoming rate decisions. The conflict involving Iran and the closure of the Strait of Hormuz have caused significant increases in the prices of oil, liquefied natural gas, fertilizers, and other key commodities that transit through this critical route. The BOC expects inflation to rise in the coming months as higher energy and fertilizer costs pass through to the broader economy. Increased transportation and food costs are anticipated. As households and businesses face higher energy expenses, discretionary spending is likely to decline, contributing to slower economic growth. To support consumers and businesses facing elevated fuel costs, the Canadian government implemented a temporary suspension of the fuel excise tax from April 20 to September 7, 2026. This measure is expected to reduce gasoline and diesel prices by approximately 10 cents and four cents per litre, respectively. According to analyst reports, the tax relief is projected to lower inflation by approximately 0.2%, with the effects expected to become evident beginning in May of this year. The trilateral trade agreement between Canada, the United States ("US"), and Mexico, known as the Canada-United States-Mexico Agreement ("CUSMA"), is up for review

City of Surrey | 2026—2030 Financial Plan | Financial Overview

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