Skip to content
Markets
Economics

Cooler US Inflation Lowers Odds of 75-Basis-Point Rate Hike in Canada

  • Domestic data due Tuesday will be key to Macklem’s next move
  • Central bank surprised markets with 100-bp increase in July
Tiff Macklem speaks virtually during a Bank of Canada news conference in Ottawa on July 13.

Tiff Macklem speaks virtually during a Bank of Canada news conference in Ottawa on July 13.

Photographer: David Kawai/Bloomberg

Slowing US inflation is prompting traders to pare bets for a 75-basis-point increase in interest rates from the Bank of Canada next month.

Overnight swap markets suggest about a 45% chance that officials led by Governor Tiff Macklem will increase borrowing costs by three quarters of a percentage point at their Sept. 7 decision. A move of that magnitude would bring the policy rate to 3.25%, the highest since April 2008.