According to Jinshi Data on July 18, as the interest rate meeting date approaches, the market tends to price in a further 25 basis point rate cut by the Bank of Canada. However, UBS believes that the Bank of Canada will remain on hold next week as wage growth has slightly accelerated and inflation data has been mixed.

UBS emphasized that the signal sent by the Bank of Canada is to gradually reduce policy restrictions. In the review summary of the June rate cut, policymakers did consider delaying the start of the easing cycle to wait for more inflation data. UBS expects the Bank of Canada to cut interest rates in September and December, but this depends on changes in data.