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CIBC Economics

The Bank of Canada kept their interest rate on hold again this week, although there were some indications that they&#8217;re starting to get a little bit more comfortable with the notion that further cuts may be needed before the end of the year.
Within the statement itself, they did say that these cuts or further reductions may be warranted if the economy is weak enough and if inflationary pressures ease back from where they have been.
And it&#8217;s really those inflationary pressures which are the key things to watch over the coming weeks.
We suspect that the Bank of Canada&#8217;s core inflation measures will start to ease again relative to recent readings, because our recent research suggests that the weakness of the economy and some deceleration that we are seeing in wage growth should lead to some softer inflation numbers.
Because of that, we continue to forecast two 25-basis point interest rate reductions by the Bank of Canada before the end of this year, and that should help economic growth rebound and accelerate again in 2026.

Is the Bank of Canada getting closer to cutting interest rates?

CIBC Economics

Andrew Grantham

Senior Economist

CIBC