Central Banks In Focus As BoC, Fed Set To Hold Rates
- Fed seen keeping powder dry as tariff deals unfold - Solid growth and benign inflation allow policymakers time - FOMC rate announcement due 18:00 GMT/14:00 EST - BoC weighs slow growth versus sticky core inflation - Q2 Business Outlook Survey points to slowdown - BoC decision due 13:45 GMT/ 09:45 EST
By Harry Daniels LiveSquawk News @HarryDaniels71
29 July 2025 | 19:15 GMT
On Wednesday, both North American central banks are expected to announce no changes to interest rates, leaving the focus squarely on their messaging.
First up at 10:45 ET is the Bank of Canada, widely anticipated to hold its overnight rate at 2.75%, where it has remained since March.
Following the June meeting, Governor Tiff Macklem reiterated that future rate cuts would depend on clear signs of economic weakness—particularly in light of softer exports and job losses in trade-exposed sectors.
In a preview note, TD Securities said persistently high core inflation likely keeps the BoC on hold. “Macklem said it would take a weaker economy and contained cost pressures to continue easing, but while the outlook has softened, we do not believe it has met the bar for further cuts.”
The Q2 Business Outlook Survey, published on 21 July, flagged the ongoing drag from tariffs and trade uncertainty.
Meanwhile, headline CPI inflation has edged back towards target, rising 1.7% y/y in May and 1.9% in June. However, core CPI remains stuck around 3%, where it has hovered for much of the year.
Alongside the rate announcement, the Monetary Policy Report (MPR) will update the Bank’s projections for inflation, growth, and its risk assessment for the Canadian economy.
Fed to stay on hold
Markets also expect the Federal Open Market Committee (FOMC) to keep the fed funds target range steady at 4.25–4.5%.
JP Morgan’s Michael Feroli said, “With no new dot plot, attention will turn to the post-meeting statement and the number of dovish dissents. We expect very few changes. Governor Waller is likely to dissent in favour of a cut; Governor Bowman is a closer call, but we suspect she joins him.”
With the rate decision seen as a foregone conclusion, investor attention will shift to developments on Capitol Hill and beyond.
The passage of the President’s flagship tax reform package has added clarity to the fiscal outlook, while progress on provisional tariff agreements could further reduce policy uncertainty for rate-setters.
This could prompt minor changes to the FOMC’s language, particularly the second paragraph of the statement, which currently reads: “Uncertainty about the economic outlook has diminished but remains elevated.”
Despite optimism from the White House, analysts still expect a modestly negative near-term impact on the economy.
Morgan Stanley economists wrote: “We still believe the most likely outcome is slow growth and firm inflation—not a recession, but a backdrop where the adverse effects of trade and immigration controls outweigh the boost from deregulation and fiscal largesse. We assign a 40% likelihood to this scenario.”
Spotlight on press conference
Attention will also turn to Chair Jerome Powell’s press conference, where familiar questions about his tenure and his relationship with the President are expected to resurface.
“Powell’s binder of prepared answers to predictable questions will be thick with material that has nothing to do with monetary policy: executive removal authority, early retirement, career jockeying by current and former governors, the cost of marble, etc,” quipped JP Morgan’s Feroli. “We expect all of these to be wasted opportunities by members of the press corps, as Powell will repeat that he is focused on the job Congress has given him.”
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- Fed seen keeping powder dry as tariff deals unfold
- Solid growth and benign inflation allow policymakers time
- FOMC rate announcement due 18:00 GMT/14:00 EST
- BoC weighs slow growth versus sticky core inflation
- Q2 Business Outlook Survey points to slowdown
- BoC decision due 13:45 GMT/ 09:45 EST
By Harry Daniels
LiveSquawk News
@HarryDaniels71
29 July 2025 | 19:15 GMT
On Wednesday, both North American central banks are expected to announce no changes to interest rates, leaving the focus squarely on their messaging.
First up at 10:45 ET is the Bank of Canada, widely anticipated to hold its overnight rate at 2.75%, where it has remained since March.
Following the June meeting, Governor Tiff Macklem reiterated that future rate cuts would depend on clear signs of economic weakness—particularly in light of softer exports and job losses in trade-exposed sectors.
In a preview note, TD Securities said persistently high core inflation likely keeps the BoC on hold. “Macklem said it would take a weaker economy and contained cost pressures to continue easing, but while the outlook has softened, we do not believe it has met the bar for further cuts.”
The Q2 Business Outlook Survey, published on 21 July, flagged the ongoing drag from tariffs and trade uncertainty.
Meanwhile, headline CPI inflation has edged back towards target, rising 1.7% y/y in May and 1.9% in June. However, core CPI remains stuck around 3%, where it has hovered for much of the year.
Alongside the rate announcement, the Monetary Policy Report (MPR) will update the Bank’s projections for inflation, growth, and its risk assessment for the Canadian economy.
Markets also expect the Federal Open Market Committee (FOMC) to keep the fed funds target range steady at 4.25–4.5%.
JP Morgan’s Michael Feroli said, “With no new dot plot, attention will turn to the post-meeting statement and the number of dovish dissents. We expect very few changes. Governor Waller is likely to dissent in favour of a cut; Governor Bowman is a closer call, but we suspect she joins him.”
With the rate decision seen as a foregone conclusion, investor attention will shift to developments on Capitol Hill and beyond.
The passage of the President’s flagship tax reform package has added clarity to the fiscal outlook, while progress on provisional tariff agreements could further reduce policy uncertainty for rate-setters.
This could prompt minor changes to the FOMC’s language, particularly the second paragraph of the statement, which currently reads: “Uncertainty about the economic outlook has diminished but remains elevated.”
Despite optimism from the White House, analysts still expect a modestly negative near-term impact on the economy.
Morgan Stanley economists wrote: “We still believe the most likely outcome is slow growth and firm inflation—not a recession, but a backdrop where the adverse effects of trade and immigration controls outweigh the boost from deregulation and fiscal largesse. We assign a 40% likelihood to this scenario.”
Attention will also turn to Chair Jerome Powell’s press conference, where familiar questions about his tenure and his relationship with the President are expected to resurface.
“Powell’s binder of prepared answers to predictable questions will be thick with material that has nothing to do with monetary policy: executive removal authority, early retirement, career jockeying by current and former governors, the cost of marble, etc,” quipped JP Morgan’s Feroli. “We expect all of these to be wasted opportunities by members of the press corps, as Powell will repeat that he is focused on the job Congress has given him.”