Update On Canada Retail Sales: Desjardins, CIBC Say Weak Retail Sales Underscore Case for Another BoC Rate Cut

09:49 AM EDT, 09/19/2025 (MT Newswires) -- With the latest retail sales figures, Desjardins continues to expect "modest" GDP growth in the third quarter, Tiago Figueiredo said Friday. As a result, he added, the "choppy" retail data doesn't change the Desjardins view that the Bank of Canada will need to deliver more easing before the end of the year. Desjardins continues to expect the policy rate will trough at 2.00%.

Over at CIBC, Katherine Judge also said Friday's retail sales data supports the need for another BoC rate cut in October, after the central bank as expected reduced the policy rate by 25 basis points to 2.5% just two days ago.

Judge noted Canadian retail sales continued to seesaw in July, with the 0.8% drop in sales erasing half of the prior month's gain. She also noted the declines were broad based, with eight of nine subsectors falling, and the core sales group (ex. gasoline and vehicles) down by 1.2%, led by a pull back at grocery stores and clothing stores. In volume terms, sales decreased by 0.8% month-over-month, leaving the level of real sales roughly unchanged since the end of last year, as consumers have remained cautious amidst the deterioration in the labour market and trade uncertainty.

While Judge noted the advance estimate for August suggested a 1.0% increase, she said looking through the monthly volatility still shows a "lackluster trend" in real spending, "supporting the need for another BoC cut in October."

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