{"id":4480,"date":"2026-07-10T00:16:00","date_gmt":"2026-07-10T00:16:00","guid":{"rendered":""},"modified":"2026-07-10T16:03:28","modified_gmt":"2026-07-10T16:03:28","slug":"forward-guidance-our-weekly-preview","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/forward-guidance\/forward-guidance-our-weekly-preview\/","title":{"rendered":"BoC set to hold as inflation and growth concerns fade"},"content":{"rendered":"\n
\n
\n

For the week of July 13th<\/sup><\/strong><\/p>\n\n\n\n

The Bank of Canada is widely expected to hold the overnight rate at 2.25% at Wednesday\u2019s policy announcement\u2014marking a sixth consecutive pause after 50 basis points of cuts over September and October last year.<\/p>\n\n\n\n

The BoC highlighted two-sided risks to the interest rate in their prior policy meetings \u2013 risks of cuts tied to potential downside growth surprises and hike risks due to concerns that higher energy prices from conflict in the Middle East could lead to \u201cgeneralized inflation.\u201d<\/p>\n\n\n\n

But both concerns have broadly eased over the last month to help solidify expectations for the central bank to remain in a wait and see mode for now.<\/p>\n\n\n\n

The spike in oil prices has yet to show significant signs of turning into a broader longer-lasting inflation shock. Higher gasoline prices have raised costs for households, but price increases haven\u2019t generally spread across the consumer spending basket. The BoC\u2019s Business Outlook Survey showed businesses\u2019 longer-run inflation expectations still well-anchored in May when oil prices were at recent peaks. And oil prices have since moved lower despite still significantly restricted traffic through the Strait of Hormuz.<\/p>\n\n\n\n

At the same time, Canada\u2019s growth and labour market data have looked better after a downside surprise in Q1 gross domestic product growth.<\/p>\n\n\n\n

Critically, CUSMA continues to protect<\/a> the bulk of Canadian exports from U.S. tariffs despite the U.S. administration opting not to (yet) extend the 2036 expiry date of the deal, and broader U.S. tariff rates have been edging lower.<\/p>\n\n\n\n

Monthly GDP data so far is pointing to stronger growth in Q2. Labour markets showed more signs of steadying in May and June after job losses earlier in the year. Our tracking<\/a> of consumer spending has remained resilient. And housing markets have firmed<\/a> in cities like Toronto and Vancouver that significantly underperformed previously.<\/p>\n\n\n\n

We\u2019re also looking ahead to May\u2019s manufacturing and wholesales\u2019 reports on Wednesday. Both should look softer than in April, particularly controlling for higher energy prices, but not enough to retrace larger gains in the prior months. Statistics Canada\u2019s advance estimate is for a 0.1% increase in real GDP in May after a 0.5% April increase, leaving growth in Q2 tracking in line with an about 2% annualized rebound.<\/p>\n\n\n\n

Overall, we continue to expect a soft but gradually improving<\/a> Canadian per-person growth backdrop will leave the BoC on hold through 2026.<\/p>\n\n\n\n

\n\n\n\n
<\/div>\n\n\n\n
\n\n\n\n
\"\"\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button><\/figure>\n\n\n\n