Markets have priced in 50-per-cent odds of either a rate hold or a 25-basis-point cut, according to data from LSEG.Nathan Denette/The Canadian Press
It’s a coin toss whether the Bank of Canada will cut its headline interest rate or hold it steady when it convenes this month.
Markets have priced in 50-per-cent odds of either a rate hold or a 25-basis-point cut, according to data from LSEG. (There are 100 basis points in a single percentage point.)
Further muddying the picture is the fact that Canada’s gross domestic product numbers were slightly higher than expected in July.
Canada’s real GDP grew by 0.2 per cent in July, the first growth posted in that category in four months.
After the release of the GDP report last week, Canadian Imperial Bank of Commerce senior economist Andrew Grantham said the economy is on track to grow by 0.8 per cent in the third quarter of 2025, which is stronger than previously expected but still lower than the Bank of Canada’s forecast in July.
The BoC lowered its interest rate by 25 basis points in September. Governor Tiff Macklem didn’t hint where rates could be headed next, but some analysts such as Mr. Grantham believe another cut will be necessary this year to prop up the economy.
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