Holt flagged the omission of a key line from the previous statement as a possible signal that the Governing Council wants more evidence before acting again, but he added, “Overall, I still like another cut this year and see nothing obvious here that they’ve signalled against that view, but at least October relative to December seems a bit richly priced in my opinion.”
Claire Fan, senior economist at RBC, pointed to the importance of upcoming data. “Looking ahead, the Bank of Canada will continue to face tough decisions as it sorts through distorted and lagged economic data for clues as to where the economy is heading, and what that implies for inflation,” Fan said.
She highlighted that the next decision will come just before the federal budget, with new employment and inflation numbers and the Q3 Business Outlook Survey all landing beforehand. “Unless there is a drastic turnaround in softening employment trends and easing core inflation in September, we think the likelihood for another cut in the October meeting is high,” Fan said.
Andrew Grantham and Katherine Judge at CIBC echoed the data-dependent stance, saying, “There was little forward guidance given in either the statement or the opening statement of the press conference, with the Bank simply stating that they will proceed ‘carefully’ as it assesses the risks to growth and inflation.” They see another 25bps cut as likely at the next meeting, citing contained inflation and a weakening labour market.
Doug Porter, chief economist at BMO, told Canadian Mortgage Professional that the Bank “did nothing to quash the possibility of further cuts. It’s just they didn’t exactly encourage them either.” Porter expects the BoC to hold in October and cut again in December, but he cautioned that “plenty could still change between now and then.”