Latest news with #interest rate
Bloomberg
14 hours ago
- Business
- Bloomberg
Ghana Cuts Rates by Most on Record as Inflation Subsides
Ghana lowered the key interest rate by the most on record after the pace of inflation significantly slowed in the West African nation and is expected to ease further. The monetary policy committee cut the key rate to 25% from 28%, Governor Johnson Asiama told reporters on Wednesday in the capital, Accra. That matched the median estimate of nine economists in a Bloomberg survey. This is the second MPC meeting this month, an emergency gathering called almost two weeks ago opted to delay publicizing any policy decision until this one was held.
Yahoo
16 hours ago
- Business
- Yahoo
Bank of Canada holds its key interest rate steady at 2.75%, as Trump's August tariff deadline looms
The Bank of Canada is expected to hold its benchmark interest rate for a third consecutive announcement when it reveals its decision at 9:45 a.m. ET today. The announcement comes amid fraught trade negotiations with the United States ahead of an August 1 deadline and an economy showing some signs of strain from the unresolved conflict. Ahead of the announcement, economists polled by Reuters were unanimous in their expectations for a hold. While recent economic growth has been below potential, there have been mixed signals from the job market and core inflation measures remain stubbornly above the Bank's target. In a note to clients on Monday, BMO economist Robert Kavcic pointed out that both "hawks and doves can make very reasonable cases at this point," suggesting the Bank will wait for more clarity. In a speech last month, Governor Tiff Macklem stuck to his tariff-era mantra that monetary policy cannot offset the impact of a protracted trade conflict. 'What we can do is make sure Canadians don't have to worry about big changes in their cost of living,' he said. In its June decision the Bank also held its policy rate stable. Follow Yahoo Finance Canada's live blog for news, updates and analysis of the Bank of Canada's interest rate announcement below. BoC: Uncertainty high, 'some resilience' in the economy, pressures on inflation "With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged," the rate announcement says. "We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade." BANK OF CANADA HOLDS ITS POLICY RATE AT 2.75 PER CENT The numbers behind this morning's BoC rate decision Here are the latest data the Bank of Canada has to guide its interest rate decision this morning. The removal of the carbon tax in many Canadian provinces continued to bring down year-over-year inflation figures in June, but not as much as in May. Overall inflation increased to 1.9 per cent, but the BoC's preferred core inflation measures remained elevated. CPI: 1.9 per cent (up from 1.7 per cent in May) CPI-median: 3.1 per cent (up from 3 per cent in May) CPI-trim: 3 per cent (unchanged from May) Canada's labour market surprised observers in June, with job gains and the unemployment rate both defying pessimistic expectations. Jobs: Net gain of 83,100 jobs to Canada's economy Unemployment rate: 6.9 per cent (down 0.1 percentage point from May) Canada's economy shrank 0.1 per cent in April, with trade tensions that month very apparent in the manufacturing sector. Economists nonetheless generally agree that the data did not indicate anything catastrophic. April GDP: 0.1 per cent decline from March (consensus was for no change) Preliminary May GDP growth: 0.1 per cent monthly drop The next GDP data release takes place tomorrow. How hawkish or dovish are Canada's central bankers? Just like the "bulls" and "bears" of the stock market, central bank policy is often described in animalistic terms. Simply put, "dovish" central bankers tend to support lower interest rates, valuing low unemployment and a strong economy over keeping inflation down. "Hawkish" policymakers tend to favour higher interest rates to keep inflation low, even if it means sacrificing some economic growth, consumer spending, and jobs. RBC Capital Markets has built a dashboard that analyzes the Bank of Canada's press releases, summaries of governing council deliberations, parliamentary testimonies, monetary policy reports, financial system reviews, statements, and speeches with an AI-based language tool. Here's a look at how hawkish or dovish members of the Bank of Canada's governing council have been in their communications over the past year. Odds heavily favour a BoC hold today. Here's what economists see for the rest of 2025 The BoC is widely expected to hold its policy rate today, with a recent poll giving just seven per cent odds of a quarter-point cut from Canada's central bank. What about the rest of 2025? Here's what some economists have to say about today's decision and beyond: CIBC's Ali Jaffery and Avery Shenfeld expect a hold from the BoC today, followed by cuts in September and December. "Our prime minister is publicly musing about tariffs becoming the permanent state of affairs, and there appears little in the way of short-term fiscal support from Ottawa to alleviate the economic pain," they wrote in a recent research report. "We would be surprised if they didn't recognize that the economy is going to need some rate relief until fiscal policy is a more active participant in the fray." "We're expecting the Bank of Canada to leave the overnight rate unchanged again on Wednesday," RBC's Claire Fan and Abbey Xu wrote in a report last week. "Sticky inflation readings, a weakening but relatively resilient economic backdrop, and prospects of larger fiscal spending, are reasons why we do not expect the BoC will cut again in this cycle." TD Bank's Maria Solovieva says recent data "don't signal a collapse, but they don't suggest strength either." For her, better-than-expected June jobs figures "sealed a hold" from the Bank of Canada today. "The real question now is whether it stays on hold in September and beyond," Solovieva wrote last week. "For now, markets are only pricing in half a cut by year-end." Over at BMO, chief economist Doug Porter says the odds of a rate cut today are "not zero," given the threat of U.S. tariffs. "At this point, there is a bit less than a 50 per cent chance of even one cut priced in for the rest of 2025," he wrote in a July 25 report. "We lean to the dovish side of the market, with a somewhat pessimistic view on the prospect for U.S. tariffs, and a relatively optimistic view on underlying inflation." National Bank's Taylor Schleich is also predicting a third straight hold from the BoC today. "Unlike the prior two decisions, there's little doubt about this one," he wrote last week. "Those who had earlier been expecting a cut in July, us included, were dealt a blow this month when hiring was reported to have surged in June and underlying inflation failed to moderate." "To us, the disinflationary pressures associated with marginal economic slack will outweigh tariff-related cost pressures which should keep all-items CPI contained and moderate core inflation," Schleich added. "Our outlook is consistent with the BoC coming off the sidelines again, and with very little easing priced, a bet on further cuts offers an attractive risk-reward profile.' BoC forecasts may include 'a relatively-speedy return to the inflation target' and slower growth In its last Monetary Policy Report, the BoC gave two potential scenarios for the evolution of U.S. trade policies, and their expected impact on the economy. Against an equally uncertain backdrop today, Karl Schamotta, chief market strategist at payments firm Corpay says the economic risks are still tilted to the downside. He says these include Canada's exposure to private sector demand in the U.S., and a long-term slump in the housing market. "If the Bank publishes an updated set of forecasts this morning, the outlook could incorporate a relatively-speedy return to the inflation target along with a slowing in growth—a mix that would remain consistent with at least one more rate cut by early 2026," Schamotta wrote in his morning newsletter on Wednesday. "We're not confident they will: three months ago, the Bank opted to publish a set of scenarios in lieu of its traditional forecasts, and this may happen again." With a third-straight hold expected today, CIBC is bullish on this Canadian 'yield trade' Earlier this month, CIBC Capital Markets flagged growing momentum behind a 'yield trade' from GICs (guaranteed investment certificates) to Canadian dividend stocks. That call should remain in play, with the BoC widely-expected to hold interest rates steady for a third meeting in a row today. GICs surged in popularity when the central bank began raising its trend-setting policy rate in March 2022 from COVID-19-era lows. Now, the tables have turned, with the BoC policy rate 225 basis points lower than last summer, following seven cuts from the central bank. 'We are still early in the trade, and with further unwinding in GICs expected through the remainder of 2025, there is still a powerful fund flow support for high dividend-yielding Canadian equities,' CIBC's Ian de Verteuil wrote in a note to clients. He breaks down which sectors he sees benefiting. Read more here. Uncertainty then, uncertainty now, uncertainty later Uncertainty has been the word at the centre of nearly all BoC discussion since the start of the year, with Macklem pointing to two intertwined unknowns, the scope of U.S. tariffs and their actual impact on Canada's economy. The Bank removed forward guidance way back in January. In a note to clients this morning, BMO economist Michael Gregory writes that the BoC is likely to offer 'a normal set of forecasts' today, but also likely to 'stress that uncertainty remains high, creating more risk (both ways) to their projections.' There's some evidence that the BoC understands this situation to be the new normal. In a speech in St. John's last month, Macklem said that even once a trade deal with the U.S. is finalized, 'we're going to have to recognize that we're going to be living in a more unpredictable world.' 'Unfortunately, that is a reality that businesses have to cope with, Canadians have to cope with, the Bank of Canada has to cope with,' he added. Is a systemic 'mortgage shock' coming? TD Bank isn't convinced TD Bank recently downplayed fears that a wave of mortgage renewals from pandemic-era homebuyers could shock Canada's economy . Economist Maria Solovieva says while many households will face higher bills, aggregate mortgage payments in Canada are actually declining. 'A borrower with a $500,000 mortgage who locked in a 2.5 per cent mortgage rate in June 2020 would now be renewing at a rate closer to 4.0 per cent, with monthly payments rising by about $320,' she wrote in a report earlier this month. 'This is the looming mortgage shock the media is warning about.' About 60 per cent of all outstanding mortgages in Canada are expected to renew in 2025 or 2026, according to a Bank of Canada report released earlier this month. The central bank says 60 per cent of this group are expected to see a payment increase. 'Yet nationally – as odd as it may sound – aggregate mortgage payments are on the decline, driven by lower mortgage rates,' Solovieva added. 'In the final two quarters of last year, mortgage interest payments declined by an average of 1.7 per cent, providing enough relief to push total mortgage payments into contraction.' The BoC's policy rate is 225 basis points lower since last summer, following seven cuts from the central bank. TD Bank estimates that more than one-third of mortgages renewing between now and 2026 fall into the 'early relief' group – characterized by variable-rates or short-term fixed mortgages that will be either renewing at lower rates or are benefitting from interest rate cuts.' For example, TD Bank says a household with a $1-million mortgage on a one-year term at a 5.9 per cent rate will, upon renewal, have a monthly mortgage payment that's 'a whopping $1,480 lower.' TSX futures rise after yesterday's record high at closing Toronto Stock Exchange futures are rising this morning, following a record closing high for Canada's main stock index on Tuesday. TSX futures were up 0.2 per cent at 06:05 a.m. ET, according to Reuters. The S&P/TSX Composite (^GSPTSE) closed at an all-time high of 27,539.88 points in Tuesday's session, led by led by gains for resource and technology stocks. In addition to today's rate decision from the Bank of Canada, investors will be watching for updates in the Canada-U.S. trade war ahead of a key tariff deadline on August 1. The U.S. Federal Reserve is also due to announce a rate decision at 2 p.m. ET. BoC likely to hold rates due to 'lack of confidence' The Bank of Canada is likely to keep interest rates steady today as it continues to grapple with deep uncertainty around trade and fiscal policies, according to Scotiabank economist Derek Holt, who sees a 'lack of confidence' holding the central bank back from offering clear forward guidance. 'Key for the BoC will be whether they have any confidence to tip toe back toward the forecasting business and hence implied guidance of some form or stick to scenarios with an ongoing lack of confidence on core issues like the evolution of trade and fiscal policies,' said Holt, in a note this morning. 'I think the latter is more likely,' he added. During the June 4 rate announcement, when the Bank of Canada held its policy rate at 2.75 per cent, Governor Tiff Macklem said the central bank was 'proceeding carefully' due to risks and uncertainties facing the Canadian economy. He pointed to the potential impact of tariffs on exports and how that could affect business investment, employment, household spending, consumer prices, and inflation expectations. Holt believes the BoC will remain cautious today and repeat those concerns. Still, Holt says the jury is still out on whether tariffs have reduced demand for Canadian exports, while employment hasn't been negatively affected and household spending is 'hardly collapsing.' Fed likely to hold rates again despite pressure from Trump The majority of U.S. policymakers appear to support holding interest rates steady at the Federal Reserve's rate announcement t, which would mark the fifth consecutive pause since its last rate cut in December. This sentiment persists despite U.S. President Donald Trump's months-long public pressure on Federal Reserve chair Jerome Powell to lower rates, recently calling him a 'numbskull' for keeping them too high. Trump has floated the idea of replacing Powell before his term ends next May, but has also noted it's unlikely he'll be fired. Federal Reserve governor Christopher Waller has also argued for a rate cut at the upcoming meeting, saying the policy rate should be three per cent, well below the current 4.25 to 4.5 per cent. He believes the Fed should focus on unemployment, and avoid waiting for the job market to deteriorate before acting. While the job market appears stable on the surface, private-sector growth has stalled, he says. Meanwhile, another Federal Reserve governor, Adriana Kugler, has called for a continued pause, citing ahistorically low unemployment rate and rising inflation from tariff pressures. Kugler predicts inflation will likely increase as the effects of tariffs unfold over the course of the year. Canada-U.S. trade war: What tariffs are in effect today? For months now, the trade war between Canada and the United States has loomed large over Bank of Canada rate decisions. Last month, Governor Tiff Macklem said the situation 'remains the biggest headwind facing the Canadian economy.' Here's a quick look at the tariffs in effect today compiled by Toronto-based law firm Blake, Cassels & Graydon LLP: Infrastructure costs of trade diversification: Not 'easy, fast or cheap' The idea of diversifying Canada's trading options has gained traction both in theory and in practice since U.S. President Donald Trump's trade policies disrupted economies around the globe. A recent Scotiabank Economics analysis shows that taking steps to increase trade with partners other than the U.S. would require serious rethinking around infrastructure. Canada would need to invest in sea and air ports in addition to 'strengthening east-west investments in rail, road and intermodal capacity' to rebalance a shipping network built to get most goods to and from the U.S. Canada's airports may be reasonably equipped for diversified trade, the report says, but the country's sea ports need serious attention, while current planned rail investments look to be well short of what's needed. And the reality of geography likely precludes a future where trade with the U.S. is not still dominant. In Newfoundland earlier this month, Bank of Canada Governor Tiff Macklem observed that "it's hard to replace our biggest export partner right next door." Businesses, consumers pause spending amid trade uncertainty Canadian businesses and consumers alike say ongoing uncertainty related to tariffs is making it difficult to plan ahead. While fewer firms than last quarter expect to experience worst-case scenarios from tariffs, many are still pausing plans for future growth. According to the Bank of Canada's second-quarter business outlook survey, most firms predict they'll maintain current staffing levels and restrict investments to regular maintenance over the next 12 months. At the same time, they're not eyeing immediate layoffs. Firms say job cuts would happen only if a sharp or prolonged decline in sales were to occur. And, even then, they'd be considered as a last resort. Meanwhile, a separate Bank of Canada survey on consumer expectations shows that two-thirds of Canadians believe the economy will enter a recession within a year. Many point to trade uncertainty as a key factor weighing on the country's economic health. This quarter, 32 per cent of consumers say tariffs are the most important factor preventing the Bank of Canada from bringing inflation under control — a notable increase from 20.4 per cent last quarter. With concerns that tariffs will push inflation higher, consumers are increasingly cautious with their spending. Discretionary purchases, such as restaurant meals or durables like furniture, remain subdued. Buyer confidence — not rate cuts — could help move Canada's housing market Canada's housing market may be showing a flicker of life — though not enough to call it a recovery. With interest rates holding and few additional rate cuts expected, some experts say what's missing isn't cheaper borrowing costs but a shift in mindset. 'People have to accept that whatever current conditions are is the new normal,' said UBC's Tsur Somerville. As long as buyers and sellers are waiting for something better, he says, they're likely to keep waiting. Recently, some have started to move. Others are still hoping for relief that may not come. The story of the country's housing market might just come down to psychology more than policy. Mortgage renewals trigger 'payment shock' for Canadian homeowners Many Canadians who purchased homes during the COVID-19 pandemic, when interest rates were at historic lows, are facing 'payment shock' as they renew their mortgages at higher rates, according to TransUnion's latest consumer pulse survey. Since March 2022, over two million consumers have seen their monthly mortgage payments increase, with the average rising by 25 per cent over three years — from $1,527 in March 2022 to $1,908 in March 2025. Those experiencing a 25 per cent or greater jump in mortgage payments are also accumulating credit card debt at more than twice the rate of those without such increases. Looking ahead, the Bank of Canada reports that roughly 60 per cent of outstanding mortgages will come up for renewal between 2025 and the end of 2026. Mortgage holders renewing five-year fixed-rate contracts during this period could face average payment hikes of 15 to 20 per cent compared with their payment in December nearly 72 per cent of Canadians say they are not considering purchasing a home within the next year, likely because they are holding out for interest rate relief from the Bank of Canada, according to TransUnion. Majority of Canadians 'desperately' want BoC to cut rates Amid ongoing financial pressures and increasing economic uncertainty, nearly two-thirds (64 per cent) of Canadians are eager for the Bank of Canada to deliver interest rate cuts, according to the latest MNP Consumer Debt Index. Despite back-to-back interest rate pauses in scheduled May and June rate decisions, 41 per cent say they are still concerned that rising interest rates could push them into bankruptcy. Canadians are under such financial strain that even if interest rates dropped, nearly half (45 per cent) remain worried that they wouldn't be able to repay their debt. 'There are some persistent fears around interest rates,' said Grant Bazian, president of MNP, in a statement. 'For some households, the damage has already been done. After years of rising costs, high interest rates and depleted savings, there may be some deep anxieties about what could still be to come.' Younger Canadians are being hit the hardest: one-third (33 per cent) of those aged 18 to 34 say they've had to delay major life milestones, like buying a home, starting a family or changing careers. Core inflation trends: 'Far too warm' A likely focus of today's announcement and a source of questions from the media are the trends in core inflation. Bank economists almost universally highlighted the core data in the most recent CPI release, and noted that those measures have been substantially higher than the overall inflation figures for quite some time. The main question, BMO's Douglas Porter suggested, is why are the core numbers remaining elevated even amid weak growth and signs of economic struggles? He suggests the sources are the long tail of shelter costs in the data, as well as upward pressure on groceries and other goods from the trade war. Scotiabank's Derek Holt, who has been critical of past cuts, wrote that the June core data 'continue the trend of far too warm underlying pressures on inflation.' He warned that the BoC 'has not yet won the fight against past drivers of inflation, let alone forward-looking uncertainties that could keep it sticky.' Why the Bank of Canada loves its core inflation gauges, and how they work Bank of Canada policymakers often refer to 'preferred measures of core inflation' as a key metric behind rate decisions. This year's drop in gas prices is a prime example of why these stripped-down price gauges are so important to the bank. According to pump price data from Kalibrate, the national average price for a litre of regular grade gasoline is down about 15 per cent year-over-year. Ottawa's elimination of the consumer-facing carbon tax, and the cancellation of corresponding levies in some provinces, are the big reasons why. Statistics Canada says falling gas prices last year created what economists call a 'base-year effect,' which can distort the appearance of current trends. In this case, the base-year effect on gasoline prices put upward pressure on the Consumer Price Index (CPI) in June. 'While consumers continued to pay less at the pump on a year-over-year basis in June (-13.4 per cent), the decline was smaller than in May (-15.5 per cent),' the agency wrote last month. 'The smaller decline was a result of a larger month-over-month decrease in June 2024 (-3.1 per cent) compared with June 2025 (-0.7 per cent).' The Bank of Canada uses a trio of modified CPI baskets to strip away different types price volatility. These 'preferred measures of core inflation' include CPI-trim, CPI-median, and CPI-common. Here's how they work: CPI-trim: This measure 'trims' away 20 per cent of the weighted monthly price variations at the bottom and top of the distribution of price changes. By removing this volatile 40 per cent, policymakers can filter out things like the impact of severe weather on food prices, for example. CPI-median: This looks at the middle value of the price changes for all items in the CPI basket when they are ranked from lowest to highest. The aim is to eliminate big price fluctuations for a reading on a typical item in each category. CPI-common: This tracks common price changes across the 55 components in the CPI basket, filtering out price fluctuations that are specific to individual components for a more stable indicator of inflationary pressures. BoC: Uncertainty high, 'some resilience' in the economy, pressures on inflation "With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged," the rate announcement says. "We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade." "With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged," the rate announcement says. "We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade." BANK OF CANADA HOLDS ITS POLICY RATE AT 2.75 PER CENT The numbers behind this morning's BoC rate decision Here are the latest data the Bank of Canada has to guide its interest rate decision this morning. The removal of the carbon tax in many Canadian provinces continued to bring down year-over-year inflation figures in June, but not as much as in May. Overall inflation increased to 1.9 per cent, but the BoC's preferred core inflation measures remained elevated. CPI: 1.9 per cent (up from 1.7 per cent in May) CPI-median: 3.1 per cent (up from 3 per cent in May) CPI-trim: 3 per cent (unchanged from May) Canada's labour market surprised observers in June, with job gains and the unemployment rate both defying pessimistic expectations. Jobs: Net gain of 83,100 jobs to Canada's economy Unemployment rate: 6.9 per cent (down 0.1 percentage point from May) Canada's economy shrank 0.1 per cent in April, with trade tensions that month very apparent in the manufacturing sector. Economists nonetheless generally agree that the data did not indicate anything catastrophic. April GDP: 0.1 per cent decline from March (consensus was for no change) Preliminary May GDP growth: 0.1 per cent monthly drop The next GDP data release takes place tomorrow. Here are the latest data the Bank of Canada has to guide its interest rate decision this morning. The removal of the carbon tax in many Canadian provinces continued to bring down year-over-year inflation figures in June, but not as much as in May. Overall inflation increased to 1.9 per cent, but the BoC's preferred core inflation measures remained elevated. CPI: 1.9 per cent (up from 1.7 per cent in May) CPI-median: 3.1 per cent (up from 3 per cent in May) CPI-trim: 3 per cent (unchanged from May) Canada's labour market surprised observers in June, with job gains and the unemployment rate both defying pessimistic expectations. Jobs: Net gain of 83,100 jobs to Canada's economy Unemployment rate: 6.9 per cent (down 0.1 percentage point from May) Canada's economy shrank 0.1 per cent in April, with trade tensions that month very apparent in the manufacturing sector. Economists nonetheless generally agree that the data did not indicate anything catastrophic. April GDP: 0.1 per cent decline from March (consensus was for no change) Preliminary May GDP growth: 0.1 per cent monthly drop The next GDP data release takes place tomorrow. How hawkish or dovish are Canada's central bankers? Just like the "bulls" and "bears" of the stock market, central bank policy is often described in animalistic terms. Simply put, "dovish" central bankers tend to support lower interest rates, valuing low unemployment and a strong economy over keeping inflation down. "Hawkish" policymakers tend to favour higher interest rates to keep inflation low, even if it means sacrificing some economic growth, consumer spending, and jobs. RBC Capital Markets has built a dashboard that analyzes the Bank of Canada's press releases, summaries of governing council deliberations, parliamentary testimonies, monetary policy reports, financial system reviews, statements, and speeches with an AI-based language tool. Here's a look at how hawkish or dovish members of the Bank of Canada's governing council have been in their communications over the past year. Just like the "bulls" and "bears" of the stock market, central bank policy is often described in animalistic terms. Simply put, "dovish" central bankers tend to support lower interest rates, valuing low unemployment and a strong economy over keeping inflation down. "Hawkish" policymakers tend to favour higher interest rates to keep inflation low, even if it means sacrificing some economic growth, consumer spending, and jobs. RBC Capital Markets has built a dashboard that analyzes the Bank of Canada's press releases, summaries of governing council deliberations, parliamentary testimonies, monetary policy reports, financial system reviews, statements, and speeches with an AI-based language tool. Here's a look at how hawkish or dovish members of the Bank of Canada's governing council have been in their communications over the past year. Odds heavily favour a BoC hold today. Here's what economists see for the rest of 2025 The BoC is widely expected to hold its policy rate today, with a recent poll giving just seven per cent odds of a quarter-point cut from Canada's central bank. What about the rest of 2025? Here's what some economists have to say about today's decision and beyond: CIBC's Ali Jaffery and Avery Shenfeld expect a hold from the BoC today, followed by cuts in September and December. "Our prime minister is publicly musing about tariffs becoming the permanent state of affairs, and there appears little in the way of short-term fiscal support from Ottawa to alleviate the economic pain," they wrote in a recent research report. "We would be surprised if they didn't recognize that the economy is going to need some rate relief until fiscal policy is a more active participant in the fray." "We're expecting the Bank of Canada to leave the overnight rate unchanged again on Wednesday," RBC's Claire Fan and Abbey Xu wrote in a report last week. "Sticky inflation readings, a weakening but relatively resilient economic backdrop, and prospects of larger fiscal spending, are reasons why we do not expect the BoC will cut again in this cycle." TD Bank's Maria Solovieva says recent data "don't signal a collapse, but they don't suggest strength either." For her, better-than-expected June jobs figures "sealed a hold" from the Bank of Canada today. "The real question now is whether it stays on hold in September and beyond," Solovieva wrote last week. "For now, markets are only pricing in half a cut by year-end." Over at BMO, chief economist Doug Porter says the odds of a rate cut today are "not zero," given the threat of U.S. tariffs. "At this point, there is a bit less than a 50 per cent chance of even one cut priced in for the rest of 2025," he wrote in a July 25 report. "We lean to the dovish side of the market, with a somewhat pessimistic view on the prospect for U.S. tariffs, and a relatively optimistic view on underlying inflation." National Bank's Taylor Schleich is also predicting a third straight hold from the BoC today. "Unlike the prior two decisions, there's little doubt about this one," he wrote last week. "Those who had earlier been expecting a cut in July, us included, were dealt a blow this month when hiring was reported to have surged in June and underlying inflation failed to moderate." "To us, the disinflationary pressures associated with marginal economic slack will outweigh tariff-related cost pressures which should keep all-items CPI contained and moderate core inflation," Schleich added. "Our outlook is consistent with the BoC coming off the sidelines again, and with very little easing priced, a bet on further cuts offers an attractive risk-reward profile.' The BoC is widely expected to hold its policy rate today, with a recent poll giving just seven per cent odds of a quarter-point cut from Canada's central bank. What about the rest of 2025? Here's what some economists have to say about today's decision and beyond: CIBC's Ali Jaffery and Avery Shenfeld expect a hold from the BoC today, followed by cuts in September and December. "Our prime minister is publicly musing about tariffs becoming the permanent state of affairs, and there appears little in the way of short-term fiscal support from Ottawa to alleviate the economic pain," they wrote in a recent research report. "We would be surprised if they didn't recognize that the economy is going to need some rate relief until fiscal policy is a more active participant in the fray." "We're expecting the Bank of Canada to leave the overnight rate unchanged again on Wednesday," RBC's Claire Fan and Abbey Xu wrote in a report last week. "Sticky inflation readings, a weakening but relatively resilient economic backdrop, and prospects of larger fiscal spending, are reasons why we do not expect the BoC will cut again in this cycle." TD Bank's Maria Solovieva says recent data "don't signal a collapse, but they don't suggest strength either." For her, better-than-expected June jobs figures "sealed a hold" from the Bank of Canada today. "The real question now is whether it stays on hold in September and beyond," Solovieva wrote last week. "For now, markets are only pricing in half a cut by year-end." Over at BMO, chief economist Doug Porter says the odds of a rate cut today are "not zero," given the threat of U.S. tariffs. "At this point, there is a bit less than a 50 per cent chance of even one cut priced in for the rest of 2025," he wrote in a July 25 report. "We lean to the dovish side of the market, with a somewhat pessimistic view on the prospect for U.S. tariffs, and a relatively optimistic view on underlying inflation." National Bank's Taylor Schleich is also predicting a third straight hold from the BoC today. "Unlike the prior two decisions, there's little doubt about this one," he wrote last week. "Those who had earlier been expecting a cut in July, us included, were dealt a blow this month when hiring was reported to have surged in June and underlying inflation failed to moderate." "To us, the disinflationary pressures associated with marginal economic slack will outweigh tariff-related cost pressures which should keep all-items CPI contained and moderate core inflation," Schleich added. "Our outlook is consistent with the BoC coming off the sidelines again, and with very little easing priced, a bet on further cuts offers an attractive risk-reward profile.' BoC forecasts may include 'a relatively-speedy return to the inflation target' and slower growth In its last Monetary Policy Report, the BoC gave two potential scenarios for the evolution of U.S. trade policies, and their expected impact on the economy. Against an equally uncertain backdrop today, Karl Schamotta, chief market strategist at payments firm Corpay says the economic risks are still tilted to the downside. He says these include Canada's exposure to private sector demand in the U.S., and a long-term slump in the housing market. "If the Bank publishes an updated set of forecasts this morning, the outlook could incorporate a relatively-speedy return to the inflation target along with a slowing in growth—a mix that would remain consistent with at least one more rate cut by early 2026," Schamotta wrote in his morning newsletter on Wednesday. "We're not confident they will: three months ago, the Bank opted to publish a set of scenarios in lieu of its traditional forecasts, and this may happen again." In its last Monetary Policy Report, the BoC gave two potential scenarios for the evolution of U.S. trade policies, and their expected impact on the economy. Against an equally uncertain backdrop today, Karl Schamotta, chief market strategist at payments firm Corpay says the economic risks are still tilted to the downside. He says these include Canada's exposure to private sector demand in the U.S., and a long-term slump in the housing market. "If the Bank publishes an updated set of forecasts this morning, the outlook could incorporate a relatively-speedy return to the inflation target along with a slowing in growth—a mix that would remain consistent with at least one more rate cut by early 2026," Schamotta wrote in his morning newsletter on Wednesday. "We're not confident they will: three months ago, the Bank opted to publish a set of scenarios in lieu of its traditional forecasts, and this may happen again." With a third-straight hold expected today, CIBC is bullish on this Canadian 'yield trade' Earlier this month, CIBC Capital Markets flagged growing momentum behind a 'yield trade' from GICs (guaranteed investment certificates) to Canadian dividend stocks. That call should remain in play, with the BoC widely-expected to hold interest rates steady for a third meeting in a row today. GICs surged in popularity when the central bank began raising its trend-setting policy rate in March 2022 from COVID-19-era lows. Now, the tables have turned, with the BoC policy rate 225 basis points lower than last summer, following seven cuts from the central bank. 'We are still early in the trade, and with further unwinding in GICs expected through the remainder of 2025, there is still a powerful fund flow support for high dividend-yielding Canadian equities,' CIBC's Ian de Verteuil wrote in a note to clients. He breaks down which sectors he sees benefiting. Read more here. Earlier this month, CIBC Capital Markets flagged growing momentum behind a 'yield trade' from GICs (guaranteed investment certificates) to Canadian dividend stocks. That call should remain in play, with the BoC widely-expected to hold interest rates steady for a third meeting in a row today. GICs surged in popularity when the central bank began raising its trend-setting policy rate in March 2022 from COVID-19-era lows. Now, the tables have turned, with the BoC policy rate 225 basis points lower than last summer, following seven cuts from the central bank. 'We are still early in the trade, and with further unwinding in GICs expected through the remainder of 2025, there is still a powerful fund flow support for high dividend-yielding Canadian equities,' CIBC's Ian de Verteuil wrote in a note to clients. He breaks down which sectors he sees benefiting. Read more here. Uncertainty then, uncertainty now, uncertainty later Uncertainty has been the word at the centre of nearly all BoC discussion since the start of the year, with Macklem pointing to two intertwined unknowns, the scope of U.S. tariffs and their actual impact on Canada's economy. The Bank removed forward guidance way back in January. In a note to clients this morning, BMO economist Michael Gregory writes that the BoC is likely to offer 'a normal set of forecasts' today, but also likely to 'stress that uncertainty remains high, creating more risk (both ways) to their projections.' There's some evidence that the BoC understands this situation to be the new normal. In a speech in St. John's last month, Macklem said that even once a trade deal with the U.S. is finalized, 'we're going to have to recognize that we're going to be living in a more unpredictable world.' 'Unfortunately, that is a reality that businesses have to cope with, Canadians have to cope with, the Bank of Canada has to cope with,' he added. Uncertainty has been the word at the centre of nearly all BoC discussion since the start of the year, with Macklem pointing to two intertwined unknowns, the scope of U.S. tariffs and their actual impact on Canada's economy. The Bank removed forward guidance way back in January. In a note to clients this morning, BMO economist Michael Gregory writes that the BoC is likely to offer 'a normal set of forecasts' today, but also likely to 'stress that uncertainty remains high, creating more risk (both ways) to their projections.' There's some evidence that the BoC understands this situation to be the new normal. In a speech in St. John's last month, Macklem said that even once a trade deal with the U.S. is finalized, 'we're going to have to recognize that we're going to be living in a more unpredictable world.' 'Unfortunately, that is a reality that businesses have to cope with, Canadians have to cope with, the Bank of Canada has to cope with,' he added. Is a systemic 'mortgage shock' coming? TD Bank isn't convinced TD Bank recently downplayed fears that a wave of mortgage renewals from pandemic-era homebuyers could shock Canada's economy . Economist Maria Solovieva says while many households will face higher bills, aggregate mortgage payments in Canada are actually declining. 'A borrower with a $500,000 mortgage who locked in a 2.5 per cent mortgage rate in June 2020 would now be renewing at a rate closer to 4.0 per cent, with monthly payments rising by about $320,' she wrote in a report earlier this month. 'This is the looming mortgage shock the media is warning about.' About 60 per cent of all outstanding mortgages in Canada are expected to renew in 2025 or 2026, according to a Bank of Canada report released earlier this month. The central bank says 60 per cent of this group are expected to see a payment increase. 'Yet nationally – as odd as it may sound – aggregate mortgage payments are on the decline, driven by lower mortgage rates,' Solovieva added. 'In the final two quarters of last year, mortgage interest payments declined by an average of 1.7 per cent, providing enough relief to push total mortgage payments into contraction.' The BoC's policy rate is 225 basis points lower since last summer, following seven cuts from the central bank. TD Bank estimates that more than one-third of mortgages renewing between now and 2026 fall into the 'early relief' group – characterized by variable-rates or short-term fixed mortgages that will be either renewing at lower rates or are benefitting from interest rate cuts.' For example, TD Bank says a household with a $1-million mortgage on a one-year term at a 5.9 per cent rate will, upon renewal, have a monthly mortgage payment that's 'a whopping $1,480 lower.' TD Bank recently downplayed fears that a wave of mortgage renewals from pandemic-era homebuyers could shock Canada's economy . Economist Maria Solovieva says while many households will face higher bills, aggregate mortgage payments in Canada are actually declining. 'A borrower with a $500,000 mortgage who locked in a 2.5 per cent mortgage rate in June 2020 would now be renewing at a rate closer to 4.0 per cent, with monthly payments rising by about $320,' she wrote in a report earlier this month. 'This is the looming mortgage shock the media is warning about.' About 60 per cent of all outstanding mortgages in Canada are expected to renew in 2025 or 2026, according to a Bank of Canada report released earlier this month. The central bank says 60 per cent of this group are expected to see a payment increase. 'Yet nationally – as odd as it may sound – aggregate mortgage payments are on the decline, driven by lower mortgage rates,' Solovieva added. 'In the final two quarters of last year, mortgage interest payments declined by an average of 1.7 per cent, providing enough relief to push total mortgage payments into contraction.' The BoC's policy rate is 225 basis points lower since last summer, following seven cuts from the central bank. TD Bank estimates that more than one-third of mortgages renewing between now and 2026 fall into the 'early relief' group – characterized by variable-rates or short-term fixed mortgages that will be either renewing at lower rates or are benefitting from interest rate cuts.' For example, TD Bank says a household with a $1-million mortgage on a one-year term at a 5.9 per cent rate will, upon renewal, have a monthly mortgage payment that's 'a whopping $1,480 lower.' TSX futures rise after yesterday's record high at closing Toronto Stock Exchange futures are rising this morning, following a record closing high for Canada's main stock index on Tuesday. TSX futures were up 0.2 per cent at 06:05 a.m. ET, according to Reuters. The S&P/TSX Composite (^GSPTSE) closed at an all-time high of 27,539.88 points in Tuesday's session, led by led by gains for resource and technology stocks. In addition to today's rate decision from the Bank of Canada, investors will be watching for updates in the Canada-U.S. trade war ahead of a key tariff deadline on August 1. The U.S. Federal Reserve is also due to announce a rate decision at 2 p.m. ET. Toronto Stock Exchange futures are rising this morning, following a record closing high for Canada's main stock index on Tuesday. TSX futures were up 0.2 per cent at 06:05 a.m. ET, according to Reuters. The S&P/TSX Composite (^GSPTSE) closed at an all-time high of 27,539.88 points in Tuesday's session, led by led by gains for resource and technology stocks. In addition to today's rate decision from the Bank of Canada, investors will be watching for updates in the Canada-U.S. trade war ahead of a key tariff deadline on August 1. The U.S. Federal Reserve is also due to announce a rate decision at 2 p.m. ET. BoC likely to hold rates due to 'lack of confidence' The Bank of Canada is likely to keep interest rates steady today as it continues to grapple with deep uncertainty around trade and fiscal policies, according to Scotiabank economist Derek Holt, who sees a 'lack of confidence' holding the central bank back from offering clear forward guidance. 'Key for the BoC will be whether they have any confidence to tip toe back toward the forecasting business and hence implied guidance of some form or stick to scenarios with an ongoing lack of confidence on core issues like the evolution of trade and fiscal policies,' said Holt, in a note this morning. 'I think the latter is more likely,' he added. During the June 4 rate announcement, when the Bank of Canada held its policy rate at 2.75 per cent, Governor Tiff Macklem said the central bank was 'proceeding carefully' due to risks and uncertainties facing the Canadian economy. He pointed to the potential impact of tariffs on exports and how that could affect business investment, employment, household spending, consumer prices, and inflation expectations. Holt believes the BoC will remain cautious today and repeat those concerns. Still, Holt says the jury is still out on whether tariffs have reduced demand for Canadian exports, while employment hasn't been negatively affected and household spending is 'hardly collapsing.' The Bank of Canada is likely to keep interest rates steady today as it continues to grapple with deep uncertainty around trade and fiscal policies, according to Scotiabank economist Derek Holt, who sees a 'lack of confidence' holding the central bank back from offering clear forward guidance. 'Key for the BoC will be whether they have any confidence to tip toe back toward the forecasting business and hence implied guidance of some form or stick to scenarios with an ongoing lack of confidence on core issues like the evolution of trade and fiscal policies,' said Holt, in a note this morning. 'I think the latter is more likely,' he added. During the June 4 rate announcement, when the Bank of Canada held its policy rate at 2.75 per cent, Governor Tiff Macklem said the central bank was 'proceeding carefully' due to risks and uncertainties facing the Canadian economy. He pointed to the potential impact of tariffs on exports and how that could affect business investment, employment, household spending, consumer prices, and inflation expectations. Holt believes the BoC will remain cautious today and repeat those concerns. Still, Holt says the jury is still out on whether tariffs have reduced demand for Canadian exports, while employment hasn't been negatively affected and household spending is 'hardly collapsing.' Fed likely to hold rates again despite pressure from Trump The majority of U.S. policymakers appear to support holding interest rates steady at the Federal Reserve's rate announcement t, which would mark the fifth consecutive pause since its last rate cut in December. This sentiment persists despite U.S. President Donald Trump's months-long public pressure on Federal Reserve chair Jerome Powell to lower rates, recently calling him a 'numbskull' for keeping them too high. Trump has floated the idea of replacing Powell before his term ends next May, but has also noted it's unlikely he'll be fired. Federal Reserve governor Christopher Waller has also argued for a rate cut at the upcoming meeting, saying the policy rate should be three per cent, well below the current 4.25 to 4.5 per cent. He believes the Fed should focus on unemployment, and avoid waiting for the job market to deteriorate before acting. While the job market appears stable on the surface, private-sector growth has stalled, he says. Meanwhile, another Federal Reserve governor, Adriana Kugler, has called for a continued pause, citing ahistorically low unemployment rate and rising inflation from tariff pressures. Kugler predicts inflation will likely increase as the effects of tariffs unfold over the course of the year. The majority of U.S. policymakers appear to support holding interest rates steady at the Federal Reserve's rate announcement t, which would mark the fifth consecutive pause since its last rate cut in December. This sentiment persists despite U.S. President Donald Trump's months-long public pressure on Federal Reserve chair Jerome Powell to lower rates, recently calling him a 'numbskull' for keeping them too high. Trump has floated the idea of replacing Powell before his term ends next May, but has also noted it's unlikely he'll be fired. Federal Reserve governor Christopher Waller has also argued for a rate cut at the upcoming meeting, saying the policy rate should be three per cent, well below the current 4.25 to 4.5 per cent. He believes the Fed should focus on unemployment, and avoid waiting for the job market to deteriorate before acting. While the job market appears stable on the surface, private-sector growth has stalled, he says. Meanwhile, another Federal Reserve governor, Adriana Kugler, has called for a continued pause, citing ahistorically low unemployment rate and rising inflation from tariff pressures. Kugler predicts inflation will likely increase as the effects of tariffs unfold over the course of the year. Canada-U.S. trade war: What tariffs are in effect today? For months now, the trade war between Canada and the United States has loomed large over Bank of Canada rate decisions. Last month, Governor Tiff Macklem said the situation 'remains the biggest headwind facing the Canadian economy.' Here's a quick look at the tariffs in effect today compiled by Toronto-based law firm Blake, Cassels & Graydon LLP: For months now, the trade war between Canada and the United States has loomed large over Bank of Canada rate decisions. Last month, Governor Tiff Macklem said the situation 'remains the biggest headwind facing the Canadian economy.' Here's a quick look at the tariffs in effect today compiled by Toronto-based law firm Blake, Cassels & Graydon LLP: Infrastructure costs of trade diversification: Not 'easy, fast or cheap' The idea of diversifying Canada's trading options has gained traction both in theory and in practice since U.S. President Donald Trump's trade policies disrupted economies around the globe. A recent Scotiabank Economics analysis shows that taking steps to increase trade with partners other than the U.S. would require serious rethinking around infrastructure. Canada would need to invest in sea and air ports in addition to 'strengthening east-west investments in rail, road and intermodal capacity' to rebalance a shipping network built to get most goods to and from the U.S. Canada's airports may be reasonably equipped for diversified trade, the report says, but the country's sea ports need serious attention, while current planned rail investments look to be well short of what's needed. And the reality of geography likely precludes a future where trade with the U.S. is not still dominant. In Newfoundland earlier this month, Bank of Canada Governor Tiff Macklem observed that "it's hard to replace our biggest export partner right next door." The idea of diversifying Canada's trading options has gained traction both in theory and in practice since U.S. President Donald Trump's trade policies disrupted economies around the globe. A recent Scotiabank Economics analysis shows that taking steps to increase trade with partners other than the U.S. would require serious rethinking around infrastructure. Canada would need to invest in sea and air ports in addition to 'strengthening east-west investments in rail, road and intermodal capacity' to rebalance a shipping network built to get most goods to and from the U.S. Canada's airports may be reasonably equipped for diversified trade, the report says, but the country's sea ports need serious attention, while current planned rail investments look to be well short of what's needed. And the reality of geography likely precludes a future where trade with the U.S. is not still dominant. In Newfoundland earlier this month, Bank of Canada Governor Tiff Macklem observed that "it's hard to replace our biggest export partner right next door." Businesses, consumers pause spending amid trade uncertainty Canadian businesses and consumers alike say ongoing uncertainty related to tariffs is making it difficult to plan ahead. While fewer firms than last quarter expect to experience worst-case scenarios from tariffs, many are still pausing plans for future growth. According to the Bank of Canada's second-quarter business outlook survey, most firms predict they'll maintain current staffing levels and restrict investments to regular maintenance over the next 12 months. At the same time, they're not eyeing immediate layoffs. Firms say job cuts would happen only if a sharp or prolonged decline in sales were to occur. And, even then, they'd be considered as a last resort. Meanwhile, a separate Bank of Canada survey on consumer expectations shows that two-thirds of Canadians believe the economy will enter a recession within a year. Many point to trade uncertainty as a key factor weighing on the country's economic health. This quarter, 32 per cent of consumers say tariffs are the most important factor preventing the Bank of Canada from bringing inflation under control — a notable increase from 20.4 per cent last quarter. With concerns that tariffs will push inflation higher, consumers are increasingly cautious with their spending. Discretionary purchases, such as restaurant meals or durables like furniture, remain subdued. Canadian businesses and consumers alike say ongoing uncertainty related to tariffs is making it difficult to plan ahead. While fewer firms than last quarter expect to experience worst-case scenarios from tariffs, many are still pausing plans for future growth. According to the Bank of Canada's second-quarter business outlook survey, most firms predict they'll maintain current staffing levels and restrict investments to regular maintenance over the next 12 months. At the same time, they're not eyeing immediate layoffs. Firms say job cuts would happen only if a sharp or prolonged decline in sales were to occur. And, even then, they'd be considered as a last resort. Meanwhile, a separate Bank of Canada survey on consumer expectations shows that two-thirds of Canadians believe the economy will enter a recession within a year. Many point to trade uncertainty as a key factor weighing on the country's economic health. This quarter, 32 per cent of consumers say tariffs are the most important factor preventing the Bank of Canada from bringing inflation under control — a notable increase from 20.4 per cent last quarter. With concerns that tariffs will push inflation higher, consumers are increasingly cautious with their spending. Discretionary purchases, such as restaurant meals or durables like furniture, remain subdued. Buyer confidence — not rate cuts — could help move Canada's housing market Canada's housing market may be showing a flicker of life — though not enough to call it a recovery. With interest rates holding and few additional rate cuts expected, some experts say what's missing isn't cheaper borrowing costs but a shift in mindset. 'People have to accept that whatever current conditions are is the new normal,' said UBC's Tsur Somerville. As long as buyers and sellers are waiting for something better, he says, they're likely to keep waiting. Recently, some have started to move. Others are still hoping for relief that may not come. The story of the country's housing market might just come down to psychology more than policy. Canada's housing market may be showing a flicker of life — though not enough to call it a recovery. With interest rates holding and few additional rate cuts expected, some experts say what's missing isn't cheaper borrowing costs but a shift in mindset. 'People have to accept that whatever current conditions are is the new normal,' said UBC's Tsur Somerville. As long as buyers and sellers are waiting for something better, he says, they're likely to keep waiting. Recently, some have started to move. Others are still hoping for relief that may not come. The story of the country's housing market might just come down to psychology more than policy. Mortgage renewals trigger 'payment shock' for Canadian homeowners Many Canadians who purchased homes during the COVID-19 pandemic, when interest rates were at historic lows, are facing 'payment shock' as they renew their mortgages at higher rates, according to TransUnion's latest consumer pulse survey. Since March 2022, over two million consumers have seen their monthly mortgage payments increase, with the average rising by 25 per cent over three years — from $1,527 in March 2022 to $1,908 in March 2025. Those experiencing a 25 per cent or greater jump in mortgage payments are also accumulating credit card debt at more than twice the rate of those without such increases. Looking ahead, the Bank of Canada reports that roughly 60 per cent of outstanding mortgages will come up for renewal between 2025 and the end of 2026. Mortgage holders renewing five-year fixed-rate contracts during this period could face average payment hikes of 15 to 20 per cent compared with their payment in December nearly 72 per cent of Canadians say they are not considering purchasing a home within the next year, likely because they are holding out for interest rate relief from the Bank of Canada, according to TransUnion. Many Canadians who purchased homes during the COVID-19 pandemic, when interest rates were at historic lows, are facing 'payment shock' as they renew their mortgages at higher rates, according to TransUnion's latest consumer pulse survey. Since March 2022, over two million consumers have seen their monthly mortgage payments increase, with the average rising by 25 per cent over three years — from $1,527 in March 2022 to $1,908 in March 2025. Those experiencing a 25 per cent or greater jump in mortgage payments are also accumulating credit card debt at more than twice the rate of those without such increases. Looking ahead, the Bank of Canada reports that roughly 60 per cent of outstanding mortgages will come up for renewal between 2025 and the end of 2026. Mortgage holders renewing five-year fixed-rate contracts during this period could face average payment hikes of 15 to 20 per cent compared with their payment in December nearly 72 per cent of Canadians say they are not considering purchasing a home within the next year, likely because they are holding out for interest rate relief from the Bank of Canada, according to TransUnion. Majority of Canadians 'desperately' want BoC to cut rates Amid ongoing financial pressures and increasing economic uncertainty, nearly two-thirds (64 per cent) of Canadians are eager for the Bank of Canada to deliver interest rate cuts, according to the latest MNP Consumer Debt Index. Despite back-to-back interest rate pauses in scheduled May and June rate decisions, 41 per cent say they are still concerned that rising interest rates could push them into bankruptcy. Canadians are under such financial strain that even if interest rates dropped, nearly half (45 per cent) remain worried that they wouldn't be able to repay their debt. 'There are some persistent fears around interest rates,' said Grant Bazian, president of MNP, in a statement. 'For some households, the damage has already been done. After years of rising costs, high interest rates and depleted savings, there may be some deep anxieties about what could still be to come.' Younger Canadians are being hit the hardest: one-third (33 per cent) of those aged 18 to 34 say they've had to delay major life milestones, like buying a home, starting a family or changing careers. Amid ongoing financial pressures and increasing economic uncertainty, nearly two-thirds (64 per cent) of Canadians are eager for the Bank of Canada to deliver interest rate cuts, according to the latest MNP Consumer Debt Index. Despite back-to-back interest rate pauses in scheduled May and June rate decisions, 41 per cent say they are still concerned that rising interest rates could push them into bankruptcy. Canadians are under such financial strain that even if interest rates dropped, nearly half (45 per cent) remain worried that they wouldn't be able to repay their debt. 'There are some persistent fears around interest rates,' said Grant Bazian, president of MNP, in a statement. 'For some households, the damage has already been done. After years of rising costs, high interest rates and depleted savings, there may be some deep anxieties about what could still be to come.' Younger Canadians are being hit the hardest: one-third (33 per cent) of those aged 18 to 34 say they've had to delay major life milestones, like buying a home, starting a family or changing careers. Core inflation trends: 'Far too warm' A likely focus of today's announcement and a source of questions from the media are the trends in core inflation. Bank economists almost universally highlighted the core data in the most recent CPI release, and noted that those measures have been substantially higher than the overall inflation figures for quite some time. The main question, BMO's Douglas Porter suggested, is why are the core numbers remaining elevated even amid weak growth and signs of economic struggles? He suggests the sources are the long tail of shelter costs in the data, as well as upward pressure on groceries and other goods from the trade war. Scotiabank's Derek Holt, who has been critical of past cuts, wrote that the June core data 'continue the trend of far too warm underlying pressures on inflation.' He warned that the BoC 'has not yet won the fight against past drivers of inflation, let alone forward-looking uncertainties that could keep it sticky.' A likely focus of today's announcement and a source of questions from the media are the trends in core inflation. Bank economists almost universally highlighted the core data in the most recent CPI release, and noted that those measures have been substantially higher than the overall inflation figures for quite some time. The main question, BMO's Douglas Porter suggested, is why are the core numbers remaining elevated even amid weak growth and signs of economic struggles? He suggests the sources are the long tail of shelter costs in the data, as well as upward pressure on groceries and other goods from the trade war. Scotiabank's Derek Holt, who has been critical of past cuts, wrote that the June core data 'continue the trend of far too warm underlying pressures on inflation.' He warned that the BoC 'has not yet won the fight against past drivers of inflation, let alone forward-looking uncertainties that could keep it sticky.' Why the Bank of Canada loves its core inflation gauges, and how they work Bank of Canada policymakers often refer to 'preferred measures of core inflation' as a key metric behind rate decisions. This year's drop in gas prices is a prime example of why these stripped-down price gauges are so important to the bank. According to pump price data from Kalibrate, the national average price for a litre of regular grade gasoline is down about 15 per cent year-over-year. Ottawa's elimination of the consumer-facing carbon tax, and the cancellation of corresponding levies in some provinces, are the big reasons why. Statistics Canada says falling gas prices last year created what economists call a 'base-year effect,' which can distort the appearance of current trends. In this case, the base-year effect on gasoline prices put upward pressure on the Consumer Price Index (CPI) in June. 'While consumers continued to pay less at the pump on a year-over-year basis in June (-13.4 per cent), the decline was smaller than in May (-15.5 per cent),' the agency wrote last month. 'The smaller decline was a result of a larger month-over-month decrease in June 2024 (-3.1 per cent) compared with June 2025 (-0.7 per cent).' The Bank of Canada uses a trio of modified CPI baskets to strip away different types price volatility. These 'preferred measures of core inflation' include CPI-trim, CPI-median, and CPI-common. Here's how they work: CPI-trim: This measure 'trims' away 20 per cent of the weighted monthly price variations at the bottom and top of the distribution of price changes. By removing this volatile 40 per cent, policymakers can filter out things like the impact of severe weather on food prices, for example. CPI-median: This looks at the middle value of the price changes for all items in the CPI basket when they are ranked from lowest to highest. The aim is to eliminate big price fluctuations for a reading on a typical item in each category. CPI-common: This tracks common price changes across the 55 components in the CPI basket, filtering out price fluctuations that are specific to individual components for a more stable indicator of inflationary pressures. Bank of Canada policymakers often refer to 'preferred measures of core inflation' as a key metric behind rate decisions. This year's drop in gas prices is a prime example of why these stripped-down price gauges are so important to the bank. According to pump price data from Kalibrate, the national average price for a litre of regular grade gasoline is down about 15 per cent year-over-year. Ottawa's elimination of the consumer-facing carbon tax, and the cancellation of corresponding levies in some provinces, are the big reasons why. Statistics Canada says falling gas prices last year created what economists call a 'base-year effect,' which can distort the appearance of current trends. In this case, the base-year effect on gasoline prices put upward pressure on the Consumer Price Index (CPI) in June. 'While consumers continued to pay less at the pump on a year-over-year basis in June (-13.4 per cent), the decline was smaller than in May (-15.5 per cent),' the agency wrote last month. 'The smaller decline was a result of a larger month-over-month decrease in June 2024 (-3.1 per cent) compared with June 2025 (-0.7 per cent).' The Bank of Canada uses a trio of modified CPI baskets to strip away different types price volatility. These 'preferred measures of core inflation' include CPI-trim, CPI-median, and CPI-common. Here's how they work: CPI-trim: This measure 'trims' away 20 per cent of the weighted monthly price variations at the bottom and top of the distribution of price changes. By removing this volatile 40 per cent, policymakers can filter out things like the impact of severe weather on food prices, for example. CPI-median: This looks at the middle value of the price changes for all items in the CPI basket when they are ranked from lowest to highest. The aim is to eliminate big price fluctuations for a reading on a typical item in each category. CPI-common: This tracks common price changes across the 55 components in the CPI basket, filtering out price fluctuations that are specific to individual components for a more stable indicator of inflationary pressures. Sign in to access your portfolio
Bloomberg
19 hours ago
- Business
- Bloomberg
Pakistan Keeps Benchmark Rate Steady Amid Inflation Concerns
Pakistan's central bank held its benchmark interest rate steady for a second consecutive meeting, choosing caution amid rising inflation risks and lingering tariff uncertainty. The State Bank of Pakistan kept the target rate at 11%, Governor Jameel Ahmad said in a press conference in Karachi Wednesday. 10 of the 33 analysts surveyed by Bloomberg had predicted the decision, while the rest had forecast a reduction.
Reuters
20 hours ago
- Business
- Reuters
Czech central banker Seidler sees limited scope for further rate cut
PRAGUE, July 30 (Reuters) - The scope for another Czech interest rate cut is limited and monetary policy is likely to be stable for some time, as services inflation stays high and the economy improves, central bank policymaker Jakub Seidler said in an interview. Seidler said data has shown economic activity performing better than expected. At the same time, some inflationary risks are materialising, while uncertainties around global trade wars have eased, he told Reuters. The Czech National Bank, which meets on August 7 on policy, has deployed a stop-go strategy since December, cutting rates twice while holding steady three times, including at the last meeting in June when it left the main rate (CZCBIR=ECI), opens new tab at 3.50%. It has cut by a total 350 basis points since 2023. Seidler, who joined the bank's seven-member board last December, said he would support keeping rates steady at the next meeting. "We are still very close to the so-called neutral rate, so I think 'on hold' right now is something that for me is quite a natural choice," Seidler said. "Generally, given all the risks around and better economic activity and weaker uncertainty related to trade wars, the scope for a further cut is very limited unless we see some unexpected event." He said the current environment could mean there would be no cut in rates before the end of the year. "Based on all current information, I would say the (main) rate would stay stable for some time ... Unless we see some unexpected developments, it is even possible that we are done" in the rate-cutting cycle, he said, adding the discussion could again be opened if some inflationary risks calm. In June, headline inflation hit 2.9% year-on-year, at the upper end of the 1 percentage-point tolerance band around the bank's 2% target. Prices of services rose 5.0%, a level Seidler called too high. "I think the disinflationary process in services is slower than I would expect or is desirable, which in my view brings some case for more careful monetary easing," he said. Higher real-estate prices transmitting into imputed rents, along with solid household demand, a shift to services in the economy, and wage growth in the sector are keeping service price growth elevated, he said. Seidler said some inflationary risks in rents, food prices and wage growth were materialising, and he expected a slightly higher inflation forecast for 2025 in the bank's new outlook due next week. An upward revision to the bank's 2025 gross domestic product forecast of 2.0% growth was also likely, he said, speaking before preliminary data on Wednesday showed the GDP increased by 2.4% year-on-year in the second quarter, the same pace as in the first quarter. On a quarter-on-quarter basis, growth slowed. He said a question was still over the extent of pre-stocking or frontloading in industry due to uncertainty over global trade wars, before the European Union and United States reached an agreement in the past week. Overall, he said, the "figures provide reasons for cautious optimism."
Bloomberg
2 days ago
- Business
- Bloomberg
Philippine Central Bank Chief Sees Another Rate Cut in August
The Philippine central bank will consider lowering its key interest rate at its next policy meeting in August, according to Governor Eli Remolona, against a backdrop of slower inflation. A reduction in the Bangko Sentral ng Pilipinas ' benchmark interest rate is 'on the table' at the Aug. 28 meeting, Remolona told reporters on Tuesday. Two more rate cuts, including the potential one next month, are possible, he added.
