Tiff Macklem, Governor of the Bank of Canada, answered reporters’ questions on the central bank’s policy outlook. This followed the recent BoC’s decision to keep its policy rate at 2.75%, which was largely anticipated by the market.
BoC press conference key highlights
We see signs of underlying upside pressure on inflation.
The US trade policy remains unpredictable.
We’re looking at a shorter horizon than usual.
The Canadian economy is showing signs of resilience.
This section below was published at 13:45 GMT to cover the Bank of Canada’s policy announcements and the initial market reaction.
In line with market analysts’ expectations, the Bank of Canada held its policy rate steady at 2.75% on Wednesday.
BoC’s policy statement highlights
- The Bank of Canada monetary policy report does not provide economic forecasts and cites uncertainty generated by US tariffs.
- Risk of a severe and escalating global trade conflict has diminished since April.
- Releases a current tariffs scenario as well as two alternative scenarios, one with increased and another with decreased tariffs.
- In the current tariff scenario, GDP grows by about 1% in the second half of 2025 and then picks up, hitting 1.8% in 2027; inflation stays close to 2% over the scenario horizon.
- In the de-escalation scenario, GDP grows around 2% in the second half of 2025 and then averages around 1.7% through the end of 2027; inflation falls in Q1 2026 before rising to close to 2% in 2027.
- In the escalation scenario, growth falls in 2025 before picking up in the first half of 2026 and rising to an average of 2%; inflation rises to just above 2.5% in Q3 2026 and then falls to around 2% in 2027.
- Q2 Canadian exports look to have fallen by around 25%; Q2 imports likely fell by about 10%.
- In all three scenarios, the nominal neutral interest rate in Canada is estimated to be in the range of 2.25% to 3.25%.
- Q2 growth in final domestic demand is estimated to be just above 1%, and Q2 consumption growth is seen at about 1%.
- The Q2 output gap is estimated to have widened to between –1.5% and –0.5% from between –1.0% and 0% in Q1.
Market reaction
The Canadian Dollar (CAD) remains on the defensive in a context of persistent USD buying, with USD/CAD navigating the area of two-month tops beyond the 1.3800 barrier following the BoC’s decision to leave rates unchanged.
Canadian Dollar PRICE Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.68% | 0.42% | 0.46% | 0.33% | 0.89% | 0.66% | 0.70% | |
| EUR | -0.68% | -0.23% | -0.31% | -0.37% | 0.17% | -0.02% | 0.07% | |
| GBP | -0.42% | 0.23% | -0.08% | -0.08% | 0.43% | 0.24% | 0.32% | |
| JPY | -0.46% | 0.31% | 0.08% | -0.04% | 0.52% | 0.30% | 0.34% | |
| CAD | -0.33% | 0.37% | 0.08% | 0.04% | 0.56% | 0.32% | 0.41% | |
| AUD | -0.89% | -0.17% | -0.43% | -0.52% | -0.56% | -0.18% | -0.11% | |
| NZD | -0.66% | 0.02% | -0.24% | -0.30% | -0.32% | 0.18% | 0.08% | |
| CHF | -0.70% | -0.07% | -0.32% | -0.34% | -0.41% | 0.11% | -0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
This section below was published as a preview of the Bank of Canada’s (BoC) monetary policy announcements at 09:00 GMT.
- FXStreet expects the Bank of Canada to maintain unchanged rates on July 30.
- The Canadian Dollar maintains a positive tone vs. the US Dollar.
- The July meeting could be the fourth consecutive decision with rates at 2.75%.
- US tariffs would remain in the spotlight at Governor Macklem’s press conference.
As the Bank of Canada (BoC) gets set to issue a new interest rate decision on Wednesday, July 30, there is a growing sense that the cutting cycle might have already ended.
The BoC decided to keep rates steady in June, citing a Canadian economy that is “softer but not sharply weaker” and noting “firmness in recent inflation data.” Indeed, the policy rate stands at 2.75%, which remains within the bank’s estimated neutral range for interest rates, set between 2.25% and 3.25%.
President Donald Trump’s tariff agenda continues to be a significant global influence. Since his January return to the White House, he has dangled a slew of new levies that could ripple through global supply chains, and those threats will likely dominate Governor Tiff Macklem’s post‑meeting press conference.
The BoC’s Q2 Business Outlook Survey (BOS), out on July 21, indicated that Canadian firms are worried about the worst-case tariff situation but are still hesitant to hire and invest. The BOS revealed that companies’ short-term inflation predictions have returned to where they were a year ago, and businesses now see a recession scenario as less likely. Earlier this year, businesses were worried that US tariffs would hurt the economy, but so far the effects have mostly been seen in the steel, aluminium, and vehicle industries.
Consumers are feeling the economy’s slowdown in their own pay cheques, the latest Survey of Consumer Expectations shows. With the job market looking softer, more people say they’re uneasy about hanging on to their positions. This anxiety is permeating everyday life as households are reported to be tightening their budgets and altering their shopping habits as the trade war noise intensifies. While they don’t anticipate a surge in prices in the near future, many express concern that a new set of tariffs could hinder the central bank’s ability to control inflation.
Previewing the BoC’s interest rate decision, analyst Taylor Schleich at the National Bank of Canada noted, “There’s growing momentum around the idea that the easing cycle is over. We disagree, and we don’t expect the Governing Council to validate this more hawkish view. Instead, they’re likely to keep guidance unchanged, reiterating that they’re proceeding carefully and monitoring the same four indicators: export demand; tariff impacts on investment, employment, and spending; inflation; and inflation expectations.”
When will the BoC release its monetary policy decision, and how could it affect USD/CAD?
The Bank of Canada will publish its policy decision on Wednesday at 13:45 GMT alongside its Monetary Policy Report (MPR). After that, Governor Tiff Macklem will attend a press conference at 14:30 GMT.
Most economists expect the Bank of Canada (BoC) to keep its policy rate anchored at 2.75% on July 30, extending the pause begun in May and June. The decision arrives as the Canadian Dollar quietly grinds higher, rebounding from winter lows near 1.4800 vs. its American counterpart to the current vicinity of 1.3700.
Pablo Piovano, a Senior Analyst at FXStreet, said that “USD/CAD maintains its rebound from the area of yearly in the 1.3550-1.3540 range. While below its key 200-day Simple Moving Average (SMA) at 1.4038, the bearish scenario is expected to prevail.”
“USD/CAD hit a new YTD bottom of 1.3538 on June 16. Once this level is cleared, more losses could go all the way down to the September 2024 floor of 1.3418 (September 25),” Piovano said.
Piovano adds that “on the upside, the pair should run into initial resistance at its June ceiling of 1.3797 set on June 23, prior to the May peak of 1.4015 reached on May 12.”
The Relative Strength Index (RSI) has rebounded beyond the 52 level, which means that further upside appears on the cards over a short-term horizon. Piovano ends by saying, “The Average Directional Index (ADX) below 15 also shows that the trend lacks conviction.”
Economic Indicator
BoC Monetary Policy Report
A quarterly diagnostic review of the health of the Canadian economy, The Bank of Canada Monetary Policy Report is a study of the Canadian economy, including forecasts for all key metrics, as well as an assessment of future risks. Any changes in this report tend to affect Canadian Dollar (CAD) volatility. If the BoC presents a hawkish outlook, that is seen as bullish for CAD, while a dovish outlook is seen as bearish.
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