The Bank of Canada is widely expected to hold its trendsetting overnight interest rate at its current level when it concludes its latest policy meeting on July 30.
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The overnight rate is currently at 2.75%, a level that has held steady over the central bank’s past two decisions. Futures traders currently put the odds of a 25-basis point rate cut from the Bank of Canada at just 7%, according to LSEG (GB:LSEG) data.
Economists point to an uptick in recent inflation data and a resilient labor market as reasons for the central bank to remain on the sidelines. The expectation has leading Canadian stocks such as Shopify (SHOP), Canada Goose (GOOS), and Thomson Reuters (TRI) trading sideways on July 28 to begin the week.
Benign Inflation
The Canadian economy added an unexpected 83,000 jobs in June, driving the unemployment rate lower for the first time since January of this year. At the same time, Canada’s annual inflation rate rose to 1.9% in June. However, inflation remains benign and below the Bank of Canada’s 2% annualized target.
While most economists expect the Bank of Canada to hold rates steady in July, the consensus expectation is for two more quarter-point rate cuts by year’s end. Overall, Canada’s labor market remains weak with the unemployment rate at 6.9%. Additionally, signs are pointing to an economic contraction in the second quarter of the year due to Canada’s tariff dispute with the neighboring U.S.
Tariff deadlines continue to hover over the federal government in Ottawa and the Bank of Canada. U.S. President Donald Trump has threatened to impose tariffs of 35% on Canadian imports starting Aug. 1. Trade negotiations between the countries remain ongoing.
Is GOOS Stock a Buy?
The stock of Canada Goose has a consensus Moderate Sell rating among nine Wall Street analysts. That rating is based on six Hold and three Sell recommendations issued in the last three months. The average GOOS price target of $12.05 implies 15.97% downside from current levels.
