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SGH Macro Advisors produces concise, forward-looking proprietary reports on the major central banks and on key economic and policy developments that drive global bond, equity, and currency markets.
Founded in 2009, SGH has over the years built a reputation as a thought leader and source of well-informed, cutting-edge information, analysis, and insight on policy and financial markets. Its briefings and reports are highly valued by many of the world’s most well-known and influential hedge funds, money managers, and policymakers.
Highlights
SGH reports are highly valued for keeping clients and policymakers informed and well-ahead of market consensus.
September 2, 2025
SGH Insight
The ECB will hold interest rates unchanged at its policy meeting on September 11. On-target inflation, and trend growth are coming in line with the June macroeconomic projections, reinforcing the hawkish narrative that interest rates are “in a good place.”US tariffs and weak economic sentiment risk pushing inflation below the central bank’s projections. This uncertain environment will keep the possibility of a rate cut alive in the coming months. However, for that to happen inflation and growth need to come in below the ECB’s projections.
Market Validation
Bloomberg 9/11/25
German bonds are paring losses across the curve after the European Central Bank retained key language from its guidance but raised its inflation forecast for this year and the next in what is a carefully balanced report.
Here’s the relevant part from its statement:
“It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance...The Governing Council is not pre-committing to a particular rate path.”
That is virtually a repeat of what it had said in July. The message, clearly, is that the governing council is reluctant to surrender the optionality of cutting rates further should the euro-zone economy weaken.
German bonds are paring losses across the curve after the European Central Bank retained key language from its guidance but raised its inflation forecast for this year and the next in what is a carefully balanced report.
Here’s the relevant part from its statement:
“It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance...The Governing Council is not pre-committing to a particular rate path.”
That is virtually a repeat of what it had said in July. The message, clearly, is that the governing council is reluctant to surrender the optionality of cutting rates further should the euro-zone economy weaken.
August 22, 2025
SGH Insight
Canada’s continued disappointing growth, coupled with sentiment dampened by trade uncertainty and the Bank of Canada’s (BOC) view that its preferred core inflation measures may be overstating price pressures, has reiterated our view that the Bank could resume its easing cycle next month.
Though the Bank held its policy rate at 2.75% last month, its communications shifted dovishly with Governor Tiff Macklem making clear in the opening statement of his press conference that the council members are not convinced the recent run-up in core inflation pressures will persist.
Market Validation
Though the Bank held its policy rate at 2.75% last month, its communications shifted dovishly with Governor Tiff Macklem making clear in the opening statement of his press conference that the council members are not convinced the recent run-up in core inflation pressures will persist.
Bloomberg 9/5/25
The Canadian economy surprisingly shed jobs for a second consecutive month as the unemployment rate jumped, increasing the likelihood of an interest rate cut from the Bank of Canada this month.
Employment fell by 65,500 positions in August, driven by decreases in part-time work. The jobless rate rose to 7.1%, Statistics Canada data showed Friday. The number of job losses surpassed even the most pessimistic projection in a Bloomberg survey of economists — the median forecast was for 5,000 jobs to be created.
Losses were led by self-employment and service-related industries — transportation, professional services and education sectors all shed jobs. Employment fell by more than 19,000 positions in the manufacturing sector.
The yield on benchmark two-year Canada government bonds fell about 6 basis points to 2.554%, while the loonie fluctuated to trade at C$1.38 per US dollar as of 8:40 a.m. in Ottawa. Traders boosted bets that the Bank of Canada would lower rates at its next meeting Sept. 17, pricing in about an 80% chance of a cut.
The Canadian economy surprisingly shed jobs for a second consecutive month as the unemployment rate jumped, increasing the likelihood of an interest rate cut from the Bank of Canada this month.
Employment fell by 65,500 positions in August, driven by decreases in part-time work. The jobless rate rose to 7.1%, Statistics Canada data showed Friday. The number of job losses surpassed even the most pessimistic projection in a Bloomberg survey of economists — the median forecast was for 5,000 jobs to be created.
Losses were led by self-employment and service-related industries — transportation, professional services and education sectors all shed jobs. Employment fell by more than 19,000 positions in the manufacturing sector.
The yield on benchmark two-year Canada government bonds fell about 6 basis points to 2.554%, while the loonie fluctuated to trade at C$1.38 per US dollar as of 8:40 a.m. in Ottawa. Traders boosted bets that the Bank of Canada would lower rates at its next meeting Sept. 17, pricing in about an 80% chance of a cut.
September 1, 2025
SGH Insight
The Federal Reserve is set to deliver a 25bp rate cut at the September FOMC meeting. By putting his thumb on the scale at Jackson Hole and framing the decision as forecast-dependent rather than data-dependent, Chair Jerome Powell has effectively locked in that outcome. The labor market is the focus now that Powell has decided to treat any elevated inflation as transitory until proven as persistent. While stronger than expected employment and inflation reports may cause market participants to call into question the Fed’s commitment to a September rate cut, we think the die is already cast for that meeting. Incoming data will have little bearing on the outcome of the September meeting and instead will shape expectations for the policy path for October and December as the FOMC releases a fresh SEP that will serve as de facto calendar guidance for the remainder of 2025. The Fed is on course to ease policy toward neutral, with our baseline calling for a quarterly pace of rate cuts, at least until the data provide a clearer signal otherwise. A weak employment report would help shift the narrative toward greater concern the Fed has fallen behind the curve and increase speculation that it would need to take rates below neutral to limit damage to the labor market.
Market Validation
Bloomberg 9/5/25
US Treasuries rallied as a weaker-than-expected jobs report prompted traders to fully price an interest-rate cut by the Federal Reserve this month.
Yields on two-year notes, which are most sensitive to changes in monetary policy, fell as much as 8 basis points to 3.5%,
Interest-rate swaps showed traders priced in a 98% probability of a quarter-point cut by the Fed at the Sept. 17 meeting. A total of 142 basis points of easing were expected over the next 12 months.
Nonfarm payrolls increased 22,000 in August after a combined 21,000 downward revision to the prior months, according to a Bureau of Labor Statistics report out Friday. The jobless rate ticked up to 4.3%, the highest level since late 2021.
US Treasuries rallied as a weaker-than-expected jobs report prompted traders to fully price an interest-rate cut by the Federal Reserve this month.
Yields on two-year notes, which are most sensitive to changes in monetary policy, fell as much as 8 basis points to 3.5%,
Interest-rate swaps showed traders priced in a 98% probability of a quarter-point cut by the Fed at the Sept. 17 meeting. A total of 142 basis points of easing were expected over the next 12 months.
Nonfarm payrolls increased 22,000 in August after a combined 21,000 downward revision to the prior months, according to a Bureau of Labor Statistics report out Friday. The jobless rate ticked up to 4.3%, the highest level since late 2021.
August 25, 2025
SGH Insight
Finally, one official’s comments after last night’s CNY fixing:
“As the US is going to enter a rate-cutting cycle, the exchange rate of the RMB against the USD would show an orderly and moderate appreciation trend. The central parity rate of the RMB against the USD is expected to rebound to the 7.0 level by the end of this year.”
Market Validation
“As the US is going to enter a rate-cutting cycle, the exchange rate of the RMB against the USD would show an orderly and moderate appreciation trend. The central parity rate of the RMB against the USD is expected to rebound to the 7.0 level by the end of this year.”
Bloomberg 8/29/25
China’s central bank is nudging the yuan
higher, stoking speculation of a subtle shift in strategy toward
favoring a stronger exchange rate after strong exports
brightened the nation’s growth outlook.
The People’s Bank of China raised its daily reference rate
for the yuan by the most in nearly a year this week even as the
dollar was largely unchanged. This may signal authorities are
not only comfortable with a stronger currency but looking to
engineer a gradual appreciation, according to some market
watchers.
China’s central bank is nudging the yuan
higher, stoking speculation of a subtle shift in strategy toward
favoring a stronger exchange rate after strong exports
brightened the nation’s growth outlook.
The People’s Bank of China raised its daily reference rate
for the yuan by the most in nearly a year this week even as the
dollar was largely unchanged. This may signal authorities are
not only comfortable with a stronger currency but looking to
engineer a gradual appreciation, according to some market
watchers.
August 15, 2025
SGH Insight
The [CFEAC] meeting also stressed that China should ….promote the research and development of a digital currency, further promote the internationalization of the RMB, and maintain a steady appreciation of the RMB against a basket of currencies while reducing its holdings of USD assets in FX reserves (all long held objectives).
SGH 7/24/25, “China: Preparing for Bessent Meeting in Stockholm:”
“Regarding the RMB exchange rate, we admit that the appreciation of the RMB against the USD is the smallest compared to other major currencies. In H1 2025, the euro rose by 13.8% against the US dollar; the Swiss franc rose by 12.6% against the US dollar; the British pound rose by 10% against the US dollar; the Japanese yen rose by 8%, while the RMB rose by only 1.9%. Despite this, the RMB against the USD would still fluctuate at its own pace in H2 based on the domestic economic situation, with the maximum appreciation likely to be around 5.0%.” [Author’s note – we have heard some tolerance for this controlled scale of RMB appreciation before].
Market Validation
SGH 7/24/25, “China: Preparing for Bessent Meeting in Stockholm:”
“Regarding the RMB exchange rate, we admit that the appreciation of the RMB against the USD is the smallest compared to other major currencies. In H1 2025, the euro rose by 13.8% against the US dollar; the Swiss franc rose by 12.6% against the US dollar; the British pound rose by 10% against the US dollar; the Japanese yen rose by 8%, while the RMB rose by only 1.9%. Despite this, the RMB against the USD would still fluctuate at its own pace in H2 based on the domestic economic situation, with the maximum appreciation likely to be around 5.0%.” [Author’s note – we have heard some tolerance for this controlled scale of RMB appreciation before].
Bloomberg 8/25/25
China strengthened its yuan fixing by the
most since January after the dollar slumped in the wake of
Federal Reserve Chair Jerome Powell’s commentary at Jackson
Hole.
The People’s Bank of China set its daily reference rate for
the local currency at 7.1161 per dollar, versus Friday’s level
of 7.1321. Monday’s fixing was the strongest since November.
China strengthened its yuan fixing by the
most since January after the dollar slumped in the wake of
Federal Reserve Chair Jerome Powell’s commentary at Jackson
Hole.
The People’s Bank of China set its daily reference rate for
the local currency at 7.1161 per dollar, versus Friday’s level
of 7.1321. Monday’s fixing was the strongest since November.
July 21, 2025
SGH Insight
Clients need to consider the degree to which the White House rather than the next Fed chair will be shaping monetary policy. The Chair is only one vote, albeit an important vote. To reshape the Fed, the White House needs to remake the Board, which presumably means a block of Trump-nominees sufficient to out-vote the five regional Presidents that make up the FOMC. Only Kugler and presumably Powell’s seats are available to fill in 2026, which would increase the number of Trump appointees to four. While we think commitment to the Fed as an institution would tie Jefferson, Cook, and Barr to their seats, there is also the possibility that the White House, or the next Fed Chair, pushes for change to those seats as well.
Market Validation
Wall Street Journal 8/20/25
President Trump has told aides he is considering attempting to fire a Biden-appointed Federal Reserve governor after one of his housing officials accused her of mortgage fraud, according to a senior White House official and another person familiar with the matter.
Bill Pulte, the head of the Federal Housing Finance Agency, alleged on social media Wednesday morning that Fed governor Lisa Cook submitted what he called fraudulent information on a pair of mortgage applications.
Trump wrote in a social media post in response to Pulte's claims that "Cook must resign, now!!!" Behind the scenes, Trump is considering going further. If she doesn't resign, Trump is discussing trying to fire her for cause, the White House official and person familiar with the matter said.
President Trump has told aides he is considering attempting to fire a Biden-appointed Federal Reserve governor after one of his housing officials accused her of mortgage fraud, according to a senior White House official and another person familiar with the matter.
Bill Pulte, the head of the Federal Housing Finance Agency, alleged on social media Wednesday morning that Fed governor Lisa Cook submitted what he called fraudulent information on a pair of mortgage applications.
Trump wrote in a social media post in response to Pulte's claims that "Cook must resign, now!!!" Behind the scenes, Trump is considering going further. If she doesn't resign, Trump is discussing trying to fire her for cause, the White House official and person familiar with the matter said.
August 13, 2025
SGH Insight
Watch Out for Risks to Current Pricing
US Treasury Secretary Scott Bessent’s market-moving push for a jumbo-sized rate cut will only reinforce an appearance Federal Reserve Chair Jerome Powell has ceded control of monetary policy to the sitting “Shadow Chair.” Watch out for the risk that neither the data nor the real Chair validates the recent move in rates.
Be aware of immediate risks to the current direction of travel in markets:
· PPI. The PPI report could push core-PCE estimates higher on the back of faster services inflation.
Market Validation
US Treasury Secretary Scott Bessent’s market-moving push for a jumbo-sized rate cut will only reinforce an appearance Federal Reserve Chair Jerome Powell has ceded control of monetary policy to the sitting “Shadow Chair.” Watch out for the risk that neither the data nor the real Chair validates the recent move in rates.
Be aware of immediate risks to the current direction of travel in markets:
· PPI. The PPI report could push core-PCE estimates higher on the back of faster services inflation.
Bloomberg 8/14/25
Treasury futures on lows of the day after July PPI data prints well above estimate across both headline and core readings.
US yields flip to cheaper on the day by around 3bp across front-end of the curve while in long-end yields rise back to unchanged on the day
Fed-dated OIS sees rate cut premium fade over coming months with 22bp of cuts priced for the September meeting vs. 25bp priced Wednesday close and a combined 58bp of cuts for the year vs. 63bp prior
Treasury futures on lows of the day after July PPI data prints well above estimate across both headline and core readings.
US yields flip to cheaper on the day by around 3bp across front-end of the curve while in long-end yields rise back to unchanged on the day
Fed-dated OIS sees rate cut premium fade over coming months with 22bp of cuts priced for the September meeting vs. 25bp priced Wednesday close and a combined 58bp of cuts for the year vs. 63bp prior
August 5, 2025
SGH Insight
The Reserve Bank of Australia (RBA) is set to cut its cash rate 25 basis points next week to 3.6%. Our expectation is for a pause at the September 29-30 meeting, followed by a second cut on November 4 that will likely mark the end of moves this year.
Market Validation
Bloomberg 8/12/25
Australia’s central bank chief signaled a
“couple more” interest-rate cuts will be required to achieve its
latest forecasts after the policy board eased as anticipated on
Tuesday.
The Reserve Bank cut its key rate to 3.6% in a unanimous
decision and has now delivered 75 basis points of easing in the
current campaign.
Australia’s central bank chief signaled a
“couple more” interest-rate cuts will be required to achieve its
latest forecasts after the policy board eased as anticipated on
Tuesday.
The Reserve Bank cut its key rate to 3.6% in a unanimous
decision and has now delivered 75 basis points of easing in the
current campaign.
July 29, 2025
SGH Insight
After two months on hold, the Bank of England (BOE) looks set to resume monetary easing with a 25 basis-point cut in rates to 4 percent next week amid contracting UK growth and a weakening labor market.
Three Monetary Policy Committee (MPC) voters dissented from June’s decision to hold, advocating a cut amid committee momentum toward more easing, and on July 1, even Governor Andrew Bailey told a panel, “we’ll see” when he was asked if the Bank would cut rates on August 7.
Inflation is still well above target following the surprise increase in June to 3.6%. So this time around it’s possible the MPC’s vote split could shift to reflect concern by the likes of chief economist Huw Pill who does not yet have sufficient confidence that inflation will slow to target in a timely manner.
If Pill dissents, he may be joined by external member Catherine Mann though her protest would depend on whether she views overall conditions as sufficiently constraining to see inflation back to target in the Bank’s projection timeframe. The Bank has said inflation will peak around 3.7% this quarter before it eases back to target early next year.
Market Validation
Three Monetary Policy Committee (MPC) voters dissented from June’s decision to hold, advocating a cut amid committee momentum toward more easing, and on July 1, even Governor Andrew Bailey told a panel, “we’ll see” when he was asked if the Bank would cut rates on August 7.
Inflation is still well above target following the surprise increase in June to 3.6%. So this time around it’s possible the MPC’s vote split could shift to reflect concern by the likes of chief economist Huw Pill who does not yet have sufficient confidence that inflation will slow to target in a timely manner.
If Pill dissents, he may be joined by external member Catherine Mann though her protest would depend on whether she views overall conditions as sufficiently constraining to see inflation back to target in the Bank’s projection timeframe. The Bank has said inflation will peak around 3.7% this quarter before it eases back to target early next year.
Bloomberg 8/7/25
The Bank of England cut interest rates to
the lowest in over two years in a closer-than-expected decision
that pitted the prospect of inflation hitting 4% against a
weakening jobs market.
Five members of the Monetary Policy Committee voted for the
quarter-point reduction to 4%, while four backed no change. That
followed an earlier three-way split that failed to reach a
majority. It was the first time in the 28-year history of the
panel that two rounds of voting were needed to reach a
presentable outcome on rates.
Deputy Governor Clare Lombardelli, Chief Economist Huw Pill
along with externals Catherine Mann and Megan Greene were those
who opposed another cut.
The Bank of England cut interest rates to
the lowest in over two years in a closer-than-expected decision
that pitted the prospect of inflation hitting 4% against a
weakening jobs market.
Five members of the Monetary Policy Committee voted for the
quarter-point reduction to 4%, while four backed no change. That
followed an earlier three-way split that failed to reach a
majority. It was the first time in the 28-year history of the
panel that two rounds of voting were needed to reach a
presentable outcome on rates.
Deputy Governor Clare Lombardelli, Chief Economist Huw Pill
along with externals Catherine Mann and Megan Greene were those
who opposed another cut.
July 30, 2025
SGH Insight
The Federal Reserve left interest rates unchanged at this week’s FOMC meeting. As expected, Vice Chair for Supervision Michelle Bowman and Governor Chris Waller both dissented in favor of cutting rate. Federal Reserve Chair Jerome Powell struck a defiant tone in response to pressure from the White House and gave no hint that the Fed was leaning toward a September cut although he didn’t exclude that option. For now, we retain a 60% chance of a rate cut in September. It’s still very much a data dependent exercise.
Powell is not seeing enough in the labor market or inflation data yet to warrant a rate cut. Powell didn’t give any ground for a return to the “recalibration” path that proceeded Trump’s tariff policy. Still, we thought it was premature for Powell to give any clear direction on September. There is plenty of time and data between now and September for the Fed to build a case for or against a rate cut.
Market Validation
Powell is not seeing enough in the labor market or inflation data yet to warrant a rate cut. Powell didn’t give any ground for a return to the “recalibration” path that proceeded Trump’s tariff policy. Still, we thought it was premature for Powell to give any clear direction on September. There is plenty of time and data between now and September for the Fed to build a case for or against a rate cut.
New York Times 8/1/25
The Federal Reserve held rates steady in July but two governors dissented, saying they had concerns about labor market fragility.
The strength of the labor market has been one of the main reasons that Federal Reserve policymakers have felt comfortable waiting to cut interest rates in recent months.
The surprisingly weak jobs report on Friday is likely to change that equation.
Jerome H. Powell, the Fed chair, described the labor market as “solid” as recently as Wednesday, pointing to the low unemployment rate and solid job gains to justify the central bank’s decision to hold interest rates steady for the fifth consecutive meeting.
But the data on Friday called that assessment into question. The unemployment rate ticked up only slightly, to 4.2 percent. But large downward revisions to job growth in May and June suggested that the labor market has not been as strong in recent months as policymakers believed.
The Federal Reserve held rates steady in July but two governors dissented, saying they had concerns about labor market fragility.
The strength of the labor market has been one of the main reasons that Federal Reserve policymakers have felt comfortable waiting to cut interest rates in recent months.
The surprisingly weak jobs report on Friday is likely to change that equation.
Jerome H. Powell, the Fed chair, described the labor market as “solid” as recently as Wednesday, pointing to the low unemployment rate and solid job gains to justify the central bank’s decision to hold interest rates steady for the fifth consecutive meeting.
But the data on Friday called that assessment into question. The unemployment rate ticked up only slightly, to 4.2 percent. But large downward revisions to job growth in May and June suggested that the labor market has not been as strong in recent months as policymakers believed.
July 27, 2025
SGH Insight
Despite enormous pressure from the White House, the Fed will not cut policy rates at the end of this week’s FOMC meeting. While there will be a discussion about rate cuts given that Governor Chris Waller will argue that point, the consensus supports holding rates steady as the Fed considers incoming inflation data. We expect Fed Chair Jay Powell will leave a September rate cut on the table and add that the Fed will produce a fresh SEP at that time. Any comment beyond that on September’s meeting two months out would only raise President Trump’s ire even more; there is plenty of time between now and September, including the August Jackson Hole conference, for the data and Fedspeak to guide market participants to the policy outcome.
Market Validation
New York Times 7/30/25
The Federal Reserve held interest rates steady on Wednesday for a fifth meeting in a row, despite officials splintering over the right time to restart cuts after an extended pause.
In standing pat, the central bank kept interest rates at a range of 4.25 percent to 4.5 percent, a level reached in December after a series of reductions at the end of last year. Two members of the powerful Board of Governors dissenting. Christopher J. Waller, a governor, and Michelle W. Bowman, vice chair for supervision — both of whom were appointed by President Trump — supported the Fed lowering interest rates by a quarter of a percentage point.
Here’s what to know about the decision:
The decision to hold interest rates steady was widely anticipated but it also was one of the most contentious decisions in decades, with two members of the board dissenting. The last time policymakers of that stature opposed a vote on monetary policy was back in 1993.
Fed Chair Jerome H. Powell was repeatedly asked about the prospects of a September rate cut. He did not take a reduction at that time off the table but made clear that the central bank had not yet made a decision about what to do. He stressed that economic data to be released between now and the mid-September meeting would be crucial.
The Federal Reserve held interest rates steady on Wednesday for a fifth meeting in a row, despite officials splintering over the right time to restart cuts after an extended pause.
In standing pat, the central bank kept interest rates at a range of 4.25 percent to 4.5 percent, a level reached in December after a series of reductions at the end of last year. Two members of the powerful Board of Governors dissenting. Christopher J. Waller, a governor, and Michelle W. Bowman, vice chair for supervision — both of whom were appointed by President Trump — supported the Fed lowering interest rates by a quarter of a percentage point.
Here’s what to know about the decision:
The decision to hold interest rates steady was widely anticipated but it also was one of the most contentious decisions in decades, with two members of the board dissenting. The last time policymakers of that stature opposed a vote on monetary policy was back in 1993.
Fed Chair Jerome H. Powell was repeatedly asked about the prospects of a September rate cut. He did not take a reduction at that time off the table but made clear that the central bank had not yet made a decision about what to do. He stressed that economic data to be released between now and the mid-September meeting would be crucial.
July 1, 2025
SGH Insight
For months we resisted the popular market narrative that insisted the Bank of Canada (BOC) was nearing the end of its easing cycle.
Those who have engaged us on Canada in person or otherwise over the last few months would be familiar with our view that the economy was facing a potential recession.
We noted in our last report that June’s meeting tone suggested that unless inflation data surprises to the upside, a rate cut was likely at the July 30 meeting (“see SGH 6/4/25; “BOC: Backloading Further Easing”).
While we’re not yet confident the Bank will pull the trigger this month, we remain convinced it will ease by another 50 basis points this year to head off a potential recession.
Market Validation
Those who have engaged us on Canada in person or otherwise over the last few months would be familiar with our view that the economy was facing a potential recession.
We noted in our last report that June’s meeting tone suggested that unless inflation data surprises to the upside, a rate cut was likely at the July 30 meeting (“see SGH 6/4/25; “BOC: Backloading Further Easing”).
While we’re not yet confident the Bank will pull the trigger this month, we remain convinced it will ease by another 50 basis points this year to head off a potential recession.
Bloomberg 7/30/25
The Bank of Canada left interest rates unchanged, citing uncertainty posed by US tariffs, but kept the door open to more cuts if the economy weakens and inflation pressures stay in check.
Policymakers led by Governor Tiff Macklem held the benchmark rate at 2.75% on Wednesday. The pause was expected by markets and economists in a Bloomberg survey, and marks the third consecutive meeting that officials have left borrowing costs unchanged.
The bank’s assessment of the economy struck a more dovish tone. Macklem’s opening statement suggests officials aren’t convinced that the recent run-up in core inflation pressures will persist — even though they’re not sure yet how higher tariffs will filter through to consumer prices.
Bonds rallied, pushing the two-year Canada yield to 2.754% as of 10:35 a.m. in Ottawa, down about 4 basis points from its level before the rate decision was released. The Canadian dollar initially dropped, then bounced back.
The Bank of Canada left interest rates unchanged, citing uncertainty posed by US tariffs, but kept the door open to more cuts if the economy weakens and inflation pressures stay in check.
Policymakers led by Governor Tiff Macklem held the benchmark rate at 2.75% on Wednesday. The pause was expected by markets and economists in a Bloomberg survey, and marks the third consecutive meeting that officials have left borrowing costs unchanged.
The bank’s assessment of the economy struck a more dovish tone. Macklem’s opening statement suggests officials aren’t convinced that the recent run-up in core inflation pressures will persist — even though they’re not sure yet how higher tariffs will filter through to consumer prices.
Bonds rallied, pushing the two-year Canada yield to 2.754% as of 10:35 a.m. in Ottawa, down about 4 basis points from its level before the rate decision was released. The Canadian dollar initially dropped, then bounced back.
News and Events
SGH Macro Advisors hosts occasional roundtables and events for clients and senior policymakers.