Economists warn Canada’s worst tariff pain is still ahead
As Trump’s latest tariff escalation continues to cloud Canada’s housing outlook, RBC’s base case holds the BoC on the sidelines through the end of 2026 before rates begin rising gradually in 2027, though Xu noted that recent BoC communications have signalled risks are tilted toward earlier rather than later hikes.
For mortgage brokers watching the overnight rate, the hold at 2.25% keeps variable mortgage rates anchored for now. But as rising bond yields and new US tariff pressure increasingly cloud the Bank of Canada’s rate path, upside inflation risks from persistent energy costs are adding complexity to any fixed-rate outlook.
Nathan Janzen and Claire Fan of RBC say the Bank of Canada is more likely to hold rates steady than cut further, with the next move potentially being a hike in 2027.https://t.co/CQEcNRvIk2
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 28, 2026
What the July data actually showed
Statistics Canada reported that real GDP was unchanged month-on-month in July, matching the advance estimate. Half of industries registered growth.
On the goods side, construction rose 1.3% and utilities gained 1.7%, but those gains were offset by a 0.9% decline in manufacturing — driven partly by refinery downtime in southwestern Ontario — and a 0.5% drop in mining, quarrying, and oil and gas extraction, following production disruptions at a Saskatchewan mine.
Retail trade fell 1.0%, weighing on the services sector, while accommodation and food services rose 0.8%, lifted by increased international travel linked to the World Cup.
