Posted by Ray Yang on Thursday, July 31st, 2025 3:31pm.
The Bank of Canada has held the overnight interest rate at 2.75%, with the Bank Rate remaining at 3.00%.
This decision reflects ongoing uncertainty tied to U.S. tariffs, global trade tensions, and their impact on the Canadian economy.
U.S. economic growth slowed in early 2025, though the labour market remains resilient.
The Eurozone posted modest gains, while China offset export losses to the U.S. with gains in other markets.
Oil prices remain stable; global equity markets are strong; and the Canadian dollar has strengthened against a weakening U.S. dollar.
Global GDP growth is forecasted to slow to 2.5% by the end of 2025, with a projected rebound to ~3% in 2026–27.
Canada’s GDP likely contracted by 1.5% in Q2 2025, following a Q1 export surge ahead of tariffs.
Unemployment in Canada rose to 6.9% in June 2025, while wage growth continues to ease.
Economic slack has widened, especially in trade-sensitive sectors.
Under the current tariff scenario, GDP growth in Canada is expected to rebound to ~1% by late 2025 and reach close to 2% by 2027.