BoC Holds at 2.25% as Housing Starts Miss

Market Snapshot

Asset	Level	Change
S&P/TSX	35,340.20	-0.21%
USD/CAD	1.40	-0.08%
EUR/CAD	1.60	-0.34%
WTI Crude	80.08	+1.43%
Natural Gas	2.87	+0.38%
Gold	3,999.00	+0.34%
Brent Crude	85.86	+1.94%
Bitcoin	63,226.63	-0.88%
Canada 2Y Govt Yield	2.27%	+1.00%
Canada 10Y Govt Yield	3.42%	-3.43%

Prior Economic Events

Data	Prior	Cons	Actual
BoC Interest Rate Decision	2.25	2.25	2.25
BoC Monetary Policy Report	-	-	-
BoC Press Conference	-	-	-
Housing Starts Level	253,100	258,000	239,000

Today's Economic Events

Data	Prior	Cons	Time
No events available

Bank of Canada kept the policy rate at 2.25 percent and released its Monetary Policy Report, signaling steady policy amid mixed growth signals.
Housing starts fell to 239,000 in June, missing consensus forecasts and highlighting softness in residential construction.
Canadian 10-year yields dropped 3.43 percent to 3.42 percent while the TSX slipped 0.21 percent and USD/CAD eased to 1.40.

Yesterday's Recap

The Bank of Canada held its benchmark rate at 2.25 percent and published the July Monetary Policy Report, noting that inflation pressures remain contained while the economy shows tentative signs of stabilization. Governor Macklem’s press conference emphasized data dependence and avoided fresh forward guidance on cuts. Housing starts printed at 239,000, well below the 258,000 consensus, pointing to continued weakness in residential investment.

The S&P/TSX closed 0.21 percent lower at 35,340.20 as energy gains were offset by broader equity caution. USD/CAD fell 0.08 percent to 1.40, supported by firmer oil prices, while the 2-year yield rose 1.00 percent to 2.27 percent and the 10-year yield declined 3.43 percent to 3.42 percent. WTI crude advanced 1.43 percent to 80.08 dollars per barrel and natural gas edged 0.38 percent higher.

Market participants interpreted the hold and MPR tone as consistent with a prolonged pause rather than imminent easing.

The Day Ahead

No high-impact Canadian data releases are scheduled for today or tomorrow, leaving markets to digest yesterday’s BoC communications. Attention will turn to upcoming retail sales and CPI prints later in the month for fresh inflation signals. Traders will also monitor U.S.

data and Fed speeches for spillover effects on CAD crosses and domestic yields. Energy markets remain sensitive to geopolitical developments in the Middle East that could influence WTI and natural gas prices. The absence of immediate catalysts suggests range-bound trading in USD/CAD near 1.40 until the next Statistics Canada releases.

Other Economic Notes

Canada’s May CPI at 3.23 percent year-over-year continues to anchor expectations that the Bank of Canada will maintain its current 2.25 percent policy rate for an extended period. Persistent food inflation highlighted in recent statements adds to the case for caution despite cooling housing activity. Government of Canada bond curves have flattened modestly, with the 10-year yield now at 3.42 percent, reflecting both domestic growth concerns and global rate differentials.

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Other Economic Notes (continued)

Energy export revenues remain supportive for the current account, yet weaker housing starts could weigh on related employment and investment figures in coming quarters. Overall, the macro backdrop favors a neutral policy stance until clearer evidence emerges on inflation convergence and labor-market resilience.

Global Macro News

Oil prices rose with WTI at 80.08 dollars and Brent at 85.86 dollars as shipping disruptions in the Persian Gulf tightened supply, benefiting Canada’s energy trade balance. The Canadian dollar consolidated near 1.4000 against the U.S. dollar amid neutral BoC rhetoric and firmer commodity prices.

Global equity markets faced pressure, with South Korea’s Kospi dropping sharply and broader Asian indices declining on geopolitical tensions. The U.S. dollar remained supported by Federal Reserve officials’ comments favoring modestly higher rates, limiting CAD upside.

Gold prices held near 3,999 dollars per ounce, providing a partial hedge for Canadian portfolios exposed to inflation risks. These external factors reinforce the Bank of Canada’s data-dependent approach, as imported inflation via energy and USD strength could offset domestic cooling. Canadian fixed-income markets tracked U.S.

Treasury moves while domestic 10-year yields fell on growth concerns.

BoC Watch

The Bank of Canada’s decision to hold the policy rate at 2.25 percent aligns with its June assessment that inflation is on a sustainable path toward target while economic slack persists. The accompanying Monetary Policy Report underscored that food price pressures are likely to linger and that further rate adjustments will depend on incoming data rather than a preset calendar. Governing Council communications stressed vigilance on both upside inflation risks and downside growth risks without providing explicit guidance on the timing of any future moves.

Markets interpreted the neutral tone and absence of dovish signals as confirmation that the rate path will remain on hold through at least the end of 2026. Quantitative tightening continues at its announced pace, gradually reducing the Bank’s balance sheet and supporting longer-term yields. The combination of steady policy and explicit data dependence leaves little room for near-term surprises, keeping CAD volatility contained around current levels.

Canada Macro Daily(Beta Mode)