RBC economists Nathan Janzen and Abbey Xu said this week’s first-quarter GDP reading appeared to strengthen the case for the Bank of Canada to keep interest rates on hold when it meets next Wednesday (June 5).
“The Bank of Canada’s interest rate decision next week will still be a close call, but with economic data holding up better than feared – and inflation in April surprising broadly on the upside once controlling for the removal of the consumer carbon tax from energy products – a second consecutive hold on the overnight rate looks more likely than a cut at this stage,” they wrote.
Bank of Montreal (BMO) chief economist Doug Porter said GDP figures were “sending no obvious distress signals so far in 2025” and that Bank policymakers will now probably make their next rate cut in July rather than June.
Canada’s unemployment rate has risen to 6.9% amid the US tariff chaos, up from 6.7% in March, with Ontario’s automaking industry left reeling from a wave of levies introduced by Trump.
StatCan said the economy likely grew by 0.1% in April after eking out growth by the same amount in March, cancelling out a 0.2% February contraction. Mining, quarrying, and oil and gas extraction all contributed strongly to that March growth.