CIBC Says Canada's Inflation Still "Too Firm" to Allow The Central Bank to Cut Rates in July

08:56 AM EDT, 07/15/2025 (MT Newswires) -- The Canadian June consumer price index report showed price pressures likely remained a bit "too firm" for the Bank of Canada's liking, said CIBC.

The CPI headline index rose by 0.1% month-over-month in non-seasonally adjusted (NSA) terms and by 0.2% month-over-month seasonally adjusted (SA), in line with consensus, and the annual rate moved up two ticks to 1.9% year over year, partly due to base-year effects, noted the bank after Tuesday's data.

The BoC's preferred core measures, CPI trim and median came in at 0.2% and 0.3% month-over-month SA, respectively, keeping the annual rate for trim unchanged at 3.0% and median one notch higher at 3.1%. CPIX and CPI excluding food and energy also rose by 0.3% month over month in June.

Shelter costs rose as rents surprisingly increased -- although that series has become very volatile --- and core goods inflation remained elevated, likely reflecting past exchange rate weakness and possible tariff-related impacts, pointed out CIBC.

On the heels of a good job report and somewhat firm price pressures, CIBC expects the BoC to remain on pause at the July 30 policy meeting because this is a central bank that by its own admission, isn't very comfortable being forward-looking.

Waiting until the fall will give them more time to observe cost pressures, the response of the economy to tariffs and the uncertainty shock, and perhaps most important, to have a clearer picture of Canada's tariff outcome, added the bank.

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