US President Trump said the US urges Iran to reach an agreement.

China International Capital Co reports US June CPI (seasonally adjusted) fell 0.4% MoM and 3.5% YoY; core CPI was flat MoM and up 2.6% YoY — both below consensus. Energy price declines were the main driver, but renewed US–Iran tensions raise the risk of energy-driven upside to inflation. AI-related inflationary effects are emerging: upstream hardware supply–demand mismatches, rising software and peripheral prices, and AI-driven capex boosting aggregate demand could make core inflation stickier. June disinflation supports the Fed holding in July, but recent Waller comments indicate the Fed is reassessing pre-emptive hikes. The firm retains a baseline view of no rate hikes this year, but warns the threshold for tightening has fallen; one to two hotter inflation prints could prompt the Fed to reopen rate-hike discussions.

Markets broadly expect the BOC to keep the overnight rate at 2.25%. The National Bank of Canada expects no change to BOC balance-sheet policy at the meeting. Since the June decision, market pricing has reduced the probability of further hikes this year; the bank expects the market-implied rate path to show little change after Wednesday’s decision but says a modest tightening bias could remain in coming months. Given ongoing uncertainty from the Iran conflict, the BOC is unlikely to signal that inflation risks have materially eased. Governor Macklem may reiterate that further hikes would be required if inflation risks intensify, and that cuts could be needed if trade risks materialize; the bank notes the odds of both outcomes have fallen versus earlier. The National Bank expects the BOC to lift its headline inflation profile while only slightly adjusting core inflation forecasts; weaker-than-expected Q1 activity means the 2026 GDP growth forecast could be cut sharply. Despite a strong Q2 rebound partially offsetting prior weakness, the BOC is expected to keep its output-gap estimate around -1.5% to -0.5% of GDP.