Bank of Canada July 2025 – NO CHANGE

/in /by

Here are the highlights:

  • Interest Rate Hold:
    • Bank of Canada held interest rates, maintaining Prime Rate of 4.95%
    • This is the third consecutive meeting they’ve held rates 
    • The total number rate cuts this cycle remains at 2.25%.
  • Economic Indicators:
    • GDP contracting in Q2 
    • under current tariff scenario GDP expected to be an anemic 1% for the rest of 2025
    • Global economy holding up due to temporary surge in activity ahead of tariffs
    • Early indications home sales are turning a corner & picking up in Canada
    • Tariff uncertainty continuing to plague consumption & investment
  • Job Market:
    • Employment unexpectedly grew in June, most job gains this year (but mostly in part time work)
    • Unemployment remained at 7% after 3 consecutive months of increasing
    • ​Wage inflation decelerating
  • Forecasts:
    • All the Big Banks expect 0.5% in rate cuts in 2025 EXCEPT Scotia (who is calling for no cuts this year but 0.25% in 2026)
  • Next Bank of Canada Meeting:
    • Scheduled for Sept 4th, 2025


Rates unchanged this morning by the Bank of Canada.

As unpredictable trade policy still plagues the economy, instead of offering base case projections for GDP & inflation, the Bank of Canada mapped out two ends of the tariff scenario – escalation vs de-escalation (a Mr Miyagi, “tariff on” “tariff off” outline, if you will).

I can sum up their insightful analysis as, more tariffs equal shrinking economy & higher inflation.  Reduction in tariffs equal moderate growth & lower inflation.  Not exactly boiling the ocean here but this does affirm what everyone’s been thinking all along.

In the current tariff scenario, they see an anemic 1% growth in the 2nd half of this year with growth gradually grinding up to a moderate 2% by 2027.  Inflation, in that scenario, is expected to stay around 2% as the upward & downward pressures offset each other.

The Bank did hint that if growth falls & inflation remains contained they will look to reduce rates, so to be determined..

In terms of where rate forecasts are sitting, not much has changed as the big banks still all expect another 0.5% in cuts this year with scotia being the outlier at a 0.25% reduction in 2026.

We shall see.

That’s it for me, thanks for watching & have a great morning.