BMO on The Week Ahead in Canada

07:16 AM EDT, 08/25/2025 (MT Newswires) -- Canada's key release this week is Q2 real gross domestic product on Friday, said Bank of Montreal (BMO).

The economy likely contracted modestly due to lower exports of steel, aluminum and autos to the United States and deferred business investment, noted the bank. Attention is also on the flash estimate for July GDP, which could signal whether the economy has slipped into a technical recession.

For now, BMO expects GDP to stall in Q3 rather than contract, before picking up later this year.

Bank of Canada Governor Tiff Mackem speaks on Tuesday. After standing pat for the last three policy meetings, the BoC has kept the door ajar for a September rate cut, given the weakening labor market, stated BMO. But a move will likely require the next consumer price index report to show some ebbing in core inflation, as the underlying three-month trend seems to be stuck almost half a percentage point above the target.

At the margin, last week's announcement by the federal government to remove retaliatory tariffs on USMCA-compliant U.S. goods will slightly reduce inflation, so increasing the odds of a rate cut, according to the bank.

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