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ING Expects BoC Rate Cut Next Week, Maintains Weak View on Canadian Dollar

BY MT Newswires | ECONOMIC | 09/12/25 08:22 AM EDT

08:22 AM EDT, 09/12/2025 (MT Newswires) -- The Bank of Canada is set to resume cutting interest rates next week in the wake of a large gross domestic product contraction in Q2 and rising unemployment, said ING.

The BoC is slated to release its policy statement at 9:45 a.m. ET Wednesday.

Tariffs will continue to weigh on the economy, and with inflation broadly in line with target, ING looks for a 25bps cut, with a further 25bps cut this Q4.

The bank's view on the Canadian dollar (CAD or loonie) has been one of underperformance in the crosses, with only small benefits coming from the weaker US dollar (USD).

That view is unchanged in light of ING's call for two more BoC cuts, considering markets are pricing in around 41bps for now.

The bank forecasts only a very "gradual descent" for USD/CAD, entirely driven by lower USD as CAD remains unattractive relative to most of the G10. ING targets 1.37 for year-end and 1.35 for mid-2026.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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