Introduction to Inflation and Interest Rates
Inflation and interest rates are two important concepts in economics that can have a significant impact on the economy and our daily lives. Recently, the May 2025 inflation print was released, and it was as expected. However, there is still uncertainty surrounding the Bank of Canada’s next rate announcement on July 30.
Analysts’ Predictions
Several analysts have shared their thoughts on the current economic situation and what it might mean for the Bank of Canada’s next move.
Randall Bartlett’s View
Randall Bartlett, Deputy Chief Economist at Desjardins, believes that the May 2025 inflation print was good overall. He notes that the recent reacceleration in core inflation measures was a concern for the Bank of Canada at its June meeting. However, he thinks that this boost was temporary and that the turn in underlying inflation in May suggests that this assertion may be correct. Bartlett expects the Bank of Canada to resume cutting rates at its July meeting.
Douglas Porter’s Opinion
Douglas Porter, Chief Economist and Managing Director at BMO Economics, has a different view. He thinks that the latest inflation results are broadly similar to April’s outing – a deceptively calm headline number with core hovering too far above the 2% target for comfort. Porter believes that the Bank of Canada will likely need to see much more improvement before it’s convinced that underlying inflation is headed back to 2%.
Other Analysts’ Predictions
Other analysts, such as Andrew Hencic, Director & Senior Economist at TD Economics, Katherine Judge, Senior Economist at CIBC Capital Markets, and Taylor Schleich, Ethan Currie, and Noah Black, Economists at National Bank of Canada, also shared their thoughts. They believe that the Bank of Canada will need to see the moderation in core measures maintained in the next report to deliver the July cut that they expect.
Challenges and Uncertainties
Derek Holt, Vice President and Head of Capital Markets Economics at Scotiabank, and Abbey Xu, Economist at RBC Economics, have a more cautious approach. They think that core inflation remains too warm to be contemplating rate cuts and that the Bank of Canada shouldn’t even be thinking about thinking about when to cut rates.
Conclusion
In conclusion, while the May 2025 inflation print was as expected, there is still uncertainty surrounding the Bank of Canada’s next rate announcement on July 30. Different analysts have different opinions on what the Bank of Canada might do next, and the next CPI inflation rate announcement on July 15, 2025, will provide more clarity on the situation. The Bank of Canada will need to consider various factors, including inflation, economic growth, and trade negotiations, before making its decision. Ultimately, the future of interest rates in Canada remains uncertain, and only time will tell what the Bank of Canada will decide to do next.
