Policy Watch: July BoC Recap

Research evidence excerpt

Policy Watch: July BoC Recap

Global Markets Research

15 July 2026Policy Watch

Economics - North America

Research Analysts

July BoC Recap North America Economics

Ruchir Sharma - NSI

• The BoC kept its policy rate steady at 2.25%, as widelyexpected. ruchir.sharma@nomura.com

+1 212 667 9186

• Governor Macklem did not signal the direction of the next move. However, the Council

reinstatedlanguage that the current policy rate remains appropriate to sustain the

recovery and return inflation to 2%, while dropping its earlier discussion of conditions

that could warrant cuts or hikes.

• The statement and forecasts were modestly hawkish than we expected in terms of

growth outlook. Although the 2026 forecast was lowered due to the Q1 GDP

contraction, the BoC judged that growth is broadening and raised its 2027–28

forecasts.

• Overall, the updated outlook and Macklem’s press conference suggest the Council

remains somewhat tilted towards supporting growth while staying attentive to inflation

risks. This supports our call for the BoC to remain on hold through 2026, with rates

near the lower end of the BoC’s neutral range estimate.

Fig. 1: The BoC kept policy rates steady at the July meeting, as Fig. 2: We continue to expect the BoC to remain on hold

widely expected through 2026

BoC's official rate forecast Nomura's monetary policy scenarios

Scenarios Probability Policy rate assumption

Base case 65% No more cuts, EOP 2.25%

Price pressures pick up, while

Case 2 20% the economy recovers

gradually, leading to a hike

Trade and geopolitical tensions

escalate, leading to a growth

Case 3 15%

downturn and additional BoC

easing

Source: BoC, Bloomberg, Haver, Nomura

Source: Nomura

The BoC kept its policy rate unchanged at 2.25% at its July meeting (Fig.1), in line with