BOC Governor Tiff Macklem
RBC continues to see the Bank of Canada lowering rates by 25 basis points on Sept 4 and again on Oct 23. The market sees a very small chance of 50 bps at one of those meetings but this forecast is generally in line with what's expected.
The highlight next week is Canada's CPI report on Tuesday but RBC notes that the bar for a shift from the BOC is high, given that Macklem has flagged "there could be setbacks along the way."
- July CPI expected to remain at 2.7% y/y, core at 2.9% y/y
- Shelter costs still main driver, but slowing due to lower mortgage rates
- BoC's preferred core measures likely ticked higher on 3-month basis
- Economic weakness points to further inflation easing
"There was concern that initial interest rate cuts from the BoC could reignite rapid house price growth, but the response in housing markets to the 25 basis point cuts in June and July has been muted with signs that rent price growth has also begun to slow."
Eyes are on housing and the latest data continues to show listings rising more quickly than sales.
