Rabobank’s Global Strategist Michael Every expects the Bank of Canada (BoC) to keep its policy rate at 2.25%, in line with Bloomberg consensus and market pricing. Every notes Hormuz-related inflation pressures but stresses that United States-Mexico-Canada Agreement (USMCA) uncertainty, US tariffs, weak investment and trade drag are weighing on the Canadian economy, which is described as fragile and close to technical recession.

BoC seen on hold as economy weakens

"Today has the Bank of Canada policy decision. We expect it to hold its policy rate at 2.25%, as both Bloomberg analysts and market pricing anticipate no change amid high uncertainty."

"Hormuz is having an inflationary impact, but ongoing USMCA negotiations and existing US tariffs are weighing on Canadian business investment and consumer confidence, with uncertainty likely to persist even if the agreement is temporarily extended."

"Indeed, Canada’s economy is fragile, with weak investment and a trade drag signalling a technical recession."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)