Page 8 - Policy Economic Report_Mar'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Core inflation is now projected to remain above central bank targets in many countries in 2026,
including the United States. Core inflation in the advanced G20 economies projected to be 2.7% in 2024,
2.6% in 2025 and 2.4% in 2026.

Figure 3: G20 headline inflation

Source- OECD

These projections assume that bilateral tariffs between Canada and the United States and between
Mexico and the United States are raised by an additional 25 percentage points on almost all
merchandise imports from April. Activity would be stronger and inflation lower in all three economies if
these tariff increases were lower or confined to a smaller range of goods, but global growth would still
be weaker than previously expected.

Monetary Policy initiatives

Policy interest rates have continued to decline in most major economies in recent months. There are a
few exceptions, notably Japan, where policy interest rates are being raised gradually, and Brazil where
the policy rate has been raised again to ensure that inflation expectations remain well-anchored.

Provided inflation expectations remain well anchored, and trade tensions do not intensify further, policy
rate reductions can continue in economies in which inflation is projected to moderate. In the euro area,
policy interest rates are projected to ease to 2% by the latter half of 2025, with gradual easing also
occurring over the next two years in Australia and the United Kingdom.

In contrast, policy rates are projected to remain unchanged in the United States until well into 2026 in
the baseline projection and ease only slightly earlier in 2026 in the lighter tariff scenario, with inflation
projected to remain above target in both cases. Policy rates are projected to increase in Japan as
monetary policy accommodation continues to be gradually withdrawn. In Canada, policy rates are

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