Decision due: Wednesday, 15 July 2026, 09:45 EDT · Current policy rate: 2.25%
1. Executive summary
The Governing Council is expected to leave the policy rate at 2.25%. The single most important driver is the sharp upside surprise in headline CPI to 3.2%, which has pushed the print outside the upper end of the 1-3% band only five weeks after the June hold. Core measures remained exactly on target, however, and the labour-market and survey data have continued to soften, leaving the Council with a classic two-sided risk: further persistence in headline pressures versus clear evidence of demand weakness and a negative output gap.
2. The call
We expect a hold at 2.25%, in line with the June decision. Conviction is moderate; the Council’s consensus style and the stable core readings give it room to wait for more confirmation before altering the rate path that has kept policy steady since the cuts concluded in late 2025. A 25bp hike would require a materially stronger set of wage or survey prints between now and the September meeting; conversely, a cut would need a decisive further deterioration in employment and business sentiment. Absent either, the Council will likely repeat that it is data-dependent while acknowledging the headline overshoot.
3. The committee
| Member | Role | Lean |
|---|---|---|
| Tiff Macklem | Governor | Hawkish tilt |
| Carolyn Rogers | Senior Deputy Governor | Neutral |
| Rhys Mendes | Deputy Governor | n/a |
| Sharon Kozicki | Deputy Governor | Dovish lean |
| Toni Gravelle | Deputy Governor | Neutral |
| Michelle Alexopoulos | External Deputy Governor | Dovish lean |
| Nicolas Vincent | External Deputy Governor | Hawkish tilt |
Macklem remains the pivotal voice; his post-June appearances have been the only fresh signals. The two external members pull in opposite directions, with Vincent’s labour-market focus tilting hawkish and Alexopoulos’s productivity work leaning dovish. The net committee composite is only mildly positive, consistent with a consensus that still favours holding unless the inflation overshoot broadens.
4. Data since the last decision
| Indicator | Latest | Prior | Δ |
|---|---|---|---|
| CPI inflation (YoY) | 3.2% (rel. 22 Jun) | 2.8% (prior print) | +0.4pp |
| CPI-trim (YoY, core) | 2.0% (rel. 22 Jun) | 2.0% (prior print) | +0.0pp |
| CPI-median (YoY, core) | 2.1% (rel. 22 Jun) | 2.1% (prior print) | +0.0pp |
| Real GDP (MoM) | -0.1% (rel. 29 May) | 0.2% (prior print) | -0.3pp |
| Real GDP growth (QoQ annualised) | -0.1% (rel. 29 May) | -1.0% (prior print) | +0.9pp |
| Employment change | 18.2k (rel. 10 Jul) | 87.8k (prior print) | -69.6k |
| Unemployment rate | 6.5% (rel. 10 Jul) | 6.6% (prior print) | -0.1pp |
| Average hourly wages (YoY) | 3.7% (rel. 10 Jul) | 3.2% (prior print) | +0.5pp |
| Ivey PMI (SA) | 56.2 (rel. 07 Jul) | 58.2 (prior print) | -2.0pt |
| Manufacturing PMI | 53.0 (rel. 02 Jul) | 52.9 (prior print) | +0.1pt |
| Services PMI | 47.1 (rel. 06 Jul) | 50.6 (prior print) | -3.5pt |
| CFIB business barometer | 49.6 (rel. 19 Jun) | 46.3 (prior print) | +3.3pt |
| Retail sales (MoM) | 0.5% (rel. 19 Jun) | 0.9% (prior print) | -0.4pp |
| Manufacturing sales (MoM) | 1.1% (rel. 24 Jun) | 4.2% (prior print) | -3.1pp |
| Trade balance | 4.2bn CAD (rel. 07 Jul) | 3.4bn CAD (prior print) | +0.8bn |
| Output gap | -1.43pp (2026-Q1) | -0.84pp (2025-Q4) | -0.59pp |
| Taylor-implied minus actual rate | -0.24pp (2026-Q1) | +0.13pp (2025-Q4) | -0.37pp |
| USD/CAD | 1.4132 (10 Jul) | 1.3927 (10 Jun) | +1.5% |
| 2Y government yield | 2.89% (13 Jul) | 2.87% (05 Jun) | +2bp |
| 10Y government yield | 3.54% (13 Jul) | 3.54% (05 Jun) | +0bp |
No new release since the last decision for: Real GDP (MoM), Real GDP growth (QoQ annualised), Output gap, Taylor-implied minus actual rate — the committee sees the same print(s) it saw last time.
Inflation data are pulling in conflicting directions. Headline CPI surprised 0.2pp to the upside and now sits above the top of the target band, yet both CPI-trim and CPI-median printed exactly in line with consensus and unchanged from the previous release. On activity, the picture is softer: retail and manufacturing sales came in below prior prints, the Ivey and services PMIs weakened. The output gap stands at -1.43pp. Labour-market numbers are mixed; employment gains slowed sharply while the unemployment rate edged lower and hourly wages accelerated +0.5pp year-on-year. Business sentiment is uneven, with the CFIB barometer improving but broader PMIs softening. Markets have priced a modestly weaker CAD and a small rise in short-term yields.
5. What the speeches say
Macklem has dominated the post-June calendar. His 16 June monetary-policy remarks and 23 June media availability in Paris reiterated that the Council would remain data-dependent and required “further evidence” before altering the policy stance, with particular emphasis on whether the headline CPI rise reflected transitory supply factors or a broader demand imbalance. The two external members spoke in May, just before the June decision. Vincent’s twin presentations on the labour market highlighted cyclical versus structural influences, signalling comfort with recent employment trends provided wage pressures do not broaden. Alexopoulos’s three appearances on productivity and AI underscored potential supply-side relief, a theme that would normally argue for a less aggressive reaction function. The contrast is clear: the Governor is keeping the door open to tighter policy if the July CPI print confirms the June overshoot, while the externals continue to stress longer-term capacity improvements that could justify a shallower restrictive stance.
6. Scenarios
| Scenario | Trigger | Rate path |
|---|---|---|
| Base case | Headline CPI moderates and cores remain stable; employment continues to slow without a sharp rise in unemployment | Hold at 2.25% through September, first cut priced for Q4 |
| Hawkish risk | July CPI prints above 3.2% and wages accelerate further; services PMI rebounds | 25bp hike in September, terminal rate 2.75% |
| Dovish risk | Employment turns negative and business barometer falls below 45; CAD weakens another 2% | Cut in September, accelerated easing thereafter |
7. Into the meeting
Markets will focus on whether the statement upgrades the language on headline persistence or continues to emphasise the stable core readings. Macklem’s press conference will be watched for any shift in the “data-dependent” formulation and for clues on how the Council weighs the widening negative output gap against the breach of the upper band. Immediate focal points are the 2-year yield reaction and USD/CAD moves in the first 30 minutes.
Full analysis on the RoboMacro site → /central-banks/BOC
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