July's Inflation Should Be Consistent With Bank of Canada Easing, Says ING

07:19 AM EDT, 08/19/2025 (MT Newswires) -- Canada releases July inflation at 8:30 a.m. ET on Tuesday, noted ING.

Expectations are for an acceleration to 0.3% month over month in headline, but a slowdown in year-over-year terms to 1.8%, said the bank. The median and trim core measures are both expected at 3.1% year over year.

Prints close to these numbers would probably be consistent with the Bank of Canada resuming its rate cuts: not because inflation is too low now, but because of the lingering significant growth risks, stated ING.

Market pricing remains too conservative on BoC easing in the bank's view.

The Canadian dollar (CAD or loonie) OIS curve only embeds 7bps and 15bps of easing for the September and October meetings, respectively, added ING. A rate cut is only fully priced in at the January meeting.

The bank expects pressure on the BoC to cut coming both internally via deteriorating activity and labor market and externally as the Federal Reserve resumes reductions in September.

As a consequence, ING thinks the next move by the BoC can come as early as October, if not September, should data deteriorate.

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