Scotiabank Notes Bank of Canada's "Finetuning"

07:39 AM EDT, 09/26/2025 (MT Newswires) -- The Bank of Canada is already within a neutral range and at the fine-tuning stage of adjustments, said Scotiabank.

The bank's forecast is for one more rate cut, but with uncertain timing. The October policy decision will be informed by data, but an argument to skip could be based on waiting for the federal government budget on Nov. 4.

Scotiabank pointed out that it successfully leaned against speculation toward further rate cuts ever since March. The bank's call changed when the facts changed in ways no one anticipated.

The BoC was likely to be more concerned about the United States economy, given a suddenly weaker job market, including large revisions, stated the bank. Canada ended many retaliatory tariffs against the U.S. Canada lost over 100,000 jobs in the past two months.

Various measures of core inflation, including revisions, have suddenly subsided. The federal budget has been delayed again. GDP surprised weaker in Q2 with soft tracking in Q3.

Nevertheless, the case for greater BoC easing is "soft," added Scotiabank. There is limited spare capacity. Fiscal policy is likely to add stimulus.

Global supply chain developments add to longer-run inflation risk. Inventory padding, wage settlements and terrible worker productivity are signs of cost pressures in domestic supply chains.

A path to a better outlook could include reasonably successful trade negotiations, fiscal supports, continued gains in interest-sensitive spending, lagging effects of an earlier immigration surge on the economy, and the shock-absorbing role of a flexible exchange rate, accoriding to the bank.

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