Market consensus is for the Bank of Canada to hold rates at the upcoming
decision. Goldman expects a hold, balancing weak domestic activity against
Iran-related inflationary pressure, and says the statement will likely stress
the bank is "ready to act as needed" if inflation persists. JPMorgan flags a
mild dovish risk to the Canadian dollar and prefers short USD/CAD positioning.
Wells Fargo is an outlier, forecasting a July hike and another increase in Q4,
viewing the near-term policy path as biased higher. BMO and RBC judge rates will
likely remain unchanged through 2027 absent a year-end pickup in growth and
employment. CIBC and Scotiabank see the economy too weak to support hikes; CIBC
notes a 2026 cut could become the most likely outcome if Canada-US trade talks
go poorly. BMO adds that sustained oil-price declines would increase the case
for cuts next year. BBH expects the BoC to keep two-way policy options and views
market pricing of >50bps of tightening over 12 months as too high. RSM warns a
persistent energy-price shock could force a BoC hike this autumn. Centurion says
two consecutive quarters of GDP decline are unlikely to change the bank’s
hawkish rhetoric aimed at anchoring inflation expectations.
