Commerzbank Sees Bank of Canada Cutting Rates Wednesday After CPI Almost as Expected

07:21 AM EDT, 09/17/2025 (MT Newswires) -- Tuesday's Canadian inflation figures were broadly in line with expectations, said Commerzbank.

The only deviation from expectations was the headline rate, which was slightly lower than anticipated due to volatile components, wrote the bank in a note to clients.

As expected, the trimmed mean, which excludes volatile components, declined. Commerzbank doesn't see this to significantly alter the Bank of Canada's outlook.

While the headline rate has remained below 2% year-on-year for several months, core measures have remained around 3% year over year.

At its meeting on Wednesday, the BoC is likely to focus more on the weakening real economy, stated the bank. The labor market has weakened significantly in recent months, growth isn't particularly impressive, and although some sentiment indicators have recovered somewhat from the massive slump in spring, there is still a long way to go before sentiment is positive again.

As a consequence, Commerzbank estimates the BoC to cut interest rates by 25 basis points on Wednesday, at 9:45 a.m. ET. However, as this has already been priced in, the decision itself is unlikely to have much impact on the Canadian dollar (CAD or loonie).

It is only if further interest rate cuts are hinted at in the coming months that the CAD is likely to come under greater pressure, added the bank.

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