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CIBC Economics

The Bank of Canada held interest rates unchanged again. They continue to monitor risks tied to inflation, from the energy price shock and to economic growth from US trade policy uncertainty. The good news is that the Canadian economy returned to growth in the second quarter, following a decline in activity in the first quarter. Some of that is tied to the FIFA World Cup, so we will see a slowdown in Q3, but we still expect growth throughout the rest of the year.
That means that slack will gradually be absorbed this year, and we expect the Bank of Canada will remain on hold for the entire year. We are starting to see some rebound in exports that are not impacted by US tariffs. Of course, helped by energy exports lately. And surveys show that businesses are increasing investment intentions and navigating trade policy uncertainty.
We expect better growth next year, with capital projects tied to fiscal stimulus getting off the ground, and we therefore view this as a transition year to better economic times in 2027.

Interest rates continue to hold steady amid mixed economic signals