Canada’s July jobs data set to confirm labour market recovery
Rate hold path stays intact ahead of September decision
The Bank of Canada held its overnight rate at 2.25% on July 15, for the sixth consecutive time, with its next announcement set for September 2.
Brokers monitoring variable-rate mortgage exposure will note that divisions among Bank of Canada decisionmakers on the economy’s resilience have surfaced in recent governing council deliberations, even as most forecasters maintain a hold call for September.
“A July report broadly in line with our expectations would reinforce our base case forecast that Canada’s labour market is continuing to stabilize, supporting the view that the economy remains on a path of modest, but steady expansion,” Janzen and Xu wrote.
On the trade front, RBC projects Canadian exports to decline 1.2% in June on lower oil prices, while imports are expected to edge up 0.3% on moderate motor vehicle shipments. The merchandise trade surplus is expected to narrow to $3.1 billion from $4.2 billion in May.
RBC economist Claire Fan previously said that “interest rates at the lower end of the estimated neutral range are still appropriate.” Meanwhile, BMO chief economist Doug Porter, noted the central bank’s medium-term inflation forecast had held steady despite oil price volatility, a signal consistent with a September hold.
