TOP STORY
BoC Holds at 2.25% — and Cracks the Door to Hikes
The Bank of Canada held its policy rate at 2.25% on Wednesday for a seventh straight meeting, but the tone shifted. Headline inflation is stuck near 3% on gasoline, the Strait of Hormuz remains largely shut, and Ottawa’s counter-tariffs land Monday. The Bank said “upside risks to inflation have increased” and that it is “prepared to adjust monetary policy as needed” — central-bank code for a hike being back on the table. Q2 GDP grew 3.3% and unemployment slipped to 6.4%, so the Bank sees no reason to ease. Scotiabank’s Derek Holt now pencils in 75 basis points of hikes starting in Q4. For contractors, that means no relief on financing costs, bond yields already drifting higher, and a trade war adding to the price of steel, aluminum and wood products at the very moment the Bank is looking for reasons to tighten.
THE NUMBERS — STATISTICS CANADA
International Merchandise Trade, July 2026 — Released today. Exports fell 2.3% and imports rose 2.2%, shrinking the surplus from $4.2B to $769M. Energy exports dropped 4.4% (crude -5.6%) and exports to the U.S. sank 6.6%, the steepest drop since April 2025. Q2’s trade-fuelled GDP bounce is already fading. Statistics Canada
Labour Productivity, Q2 2026 — Released today. Business productivity rose 1.0%, the best quarter since 2020, led by goods producers (+1.7%) with mining and oil and gas the top contributors. The catch: hours worked fell, and unit labour costs rose 0.6% for a fifth straight quarter. Statistics Canada
Oil and Gas Capital Spending, Q2 2026 — Released Tuesday. Capex in oil and gas extraction hit $11.0B, up 7.2% quarter over quarter. Alberta’s field work is holding up even as Ottawa dithers on pipelines. Statistics Canada
FROM THE ECONOMISTS
RBC Economics — Bank of Canada Meeting Recap: Holding Steady Amid Trade Headwinds — Risks now sit on both sides of the inflation mandate. RBC reads the recovery as strong enough that 2.25% is already supportive; no cuts coming.
Scotiabank — Derek Holt via CBC News — The BoC “very clearly cracked open the door” to tightening as soon as October 28. Holt forecasts 75 basis points of hikes beginning in Q4.
CIBC — Avery Shenfeld via CBC News — A hold “amidst the fog of a trade war.” The Bank judged the direct tariff hit as small but flagged trade uncertainty as a further drag.
TD Economics — The Bank of Canada Holds Its Interest Rate — Marc Ercolao expects the Bank to sit on the sidelines for the rest of 2026, with strong Q2 growth removing any case for easing.
WORTH WATCHING
Counter-Tariffs Land Monday, September 8 — Ottawa’s 15%, 25% and 50% tariffs on $27.6B of U.S. goods take effect, with steel front and centre. Check fixed-price contracts for escalation clauses now.
August Labour Force Survey — Friday — Unemployment sits at 6.4%. Another drop feeds the hawks at the BoC; watch the construction employment line for BC and Alberta.
BoC Decision and MPR — October 28 — Holt calls it a live meeting. Between now and then: two CPI prints, two jobs reports, and whatever the trade war and Hormuz throw at us.
COFFEE & CONSTRUCTION
Every Monday, Wednesday and Friday, ICBA’s Jordan Bateman serves up a 10-minute rundown of the news facing BC and Alberta construction on the Coffee & Construction podcast. Catch the latest episode: C&C #27: WorkSafeBC Wants to Run Your Business. Subscribe free on YouTube (@ICBATV), ICBA’s socials, or wherever you download podcasts.