Bank of Canada: Slightly sunnier days

Research evidence excerpt

Bank of Canada: Slightly sunnier days

J P M O R G A N North America Economic Research

15 July 2026

Bank of Canada: Slightly sunnier

days

Economic and Policy Research

Michael S Hanson

(1-212) 622-8603

michael.s.hanson@jpmchase.com

Bennett Parrish

• The Bank of Canada again held rates steady at 2.25%, as widely expected (1-212)bennett.parrish@jpmchase.com622-9003

JPMorgan Chase Bank NA• While the growth outlook was upgraded, uncertainty remains elevated

• Macklem noted upside inflation risks from the Middle East conflict, but

limited pass-through and excess supply lean against

• Thus we still see the Bank on hold for the rest of this year

The Bank of Canada held rates steady in July (as widely expected), but the tone of

the outlook was more positive as the press release noted “signs of improvement”

in growth. However, risks from both the US trade restrictions and the conflict in

the Middle East continued to leave uncertainty elevated. Although war-related

pressures were seen as still feeding into some consumer prices, broadly the pass-

through has reportedly been limited. The BoC still sees the economy remaining

with excess supply and that is still putting downward pressure on inflation. Under

this baseline outlook, Governor Macklem reaffirmed that policy is currently

appropriately calibrated to achieve 2% inflation. Notably, Canada is already closer

to that goal than most other DM central banks. As such, we remain comfortable

with our call that the BoC will keep policy on hold for the rest of this year.

The optimism on the outlook reflected signs of a rebound in growth after the

economy contracted around the turn of the year. Macklem suggested firms have

started to adapt to the changed trade relationship with the US, while oil and gas