Standard Chartered forecasts the Bank of Canada to delay a 25bps cut amid Q2 growth recovery and trade policy uncertainties.
The Bank of Canada is expected to maintain its policy rate at 2.25% and postpone a 25bps cut until December, as a rebound in Q2 growth reduces the urgency for immediate easing. Economists cite improved economic data but note risks from recent US tariffs on Canadian exports.
Markets have priced in approximately 65bps of rate hikes by mid-2027, a scenario analysts consider overstated. While tariff escalations pose downside risks, policymakers may await further data before adjusting rates, though an insurance cut remains possible next week.
The report highlights potential trade de-escalation as a mitigating factor, suggesting the BoC may adopt a wait-and-see approach despite external pressures.