ICBA EconoBot | BoC Rate Hold, Housing Starts Plummet

TOP STORY

BoC Holds a Sixth Straight Time — But an Oil-Fed Inflation Bump Shelves Any Rate Relief

The Bank of Canada left its policy rate at 2.25% on Wednesday — a sixth consecutive hold — and its July Monetary Policy Report says growth has resumed, pencilling in roughly 2.5% in the second quarter as tariff-related drag unwinds. That is the good news for contractors. The catch is inflation: CPI jumped to 3.2% in May, driven by a gasoline spike tied to the Middle East conflict, and the Bank warned energy costs will keep total inflation elevated near-term (BoC statement). For BC and Alberta builders, higher crude is a double-edged sword — a tailwind for oilpatch investment and Alberta project pipelines, but an immediate pass-through into diesel, asphalt and freight. With the Bank projecting just 0.7% GDP growth this year before 1.8% in 2027, and rate cuts now firmly parked, the cost of financing projects isn't getting cheaper any time soon (Global News).

THE NUMBERS — STATISTICS CANADA

Housing Starts, June 2026 — Released today. The national seasonally adjusted pace fell 6% to 238,971 units, with the six-month trend down 2.8% to 248,123 — and the West drove the softness. Vancouver starts plunged 35% year-over-year on weaker multi-unit and single-detached activity, and B.C. starts in centres of 10,000-plus fell 46% from a year earlier. Alberta is cooling from record highs — Edmonton off 39% and provincewide starts down 18% year-over-year in June — though its six-month trend still ticked up 4%, and Calgary bucked the trend at +3%. High costs, softer demand and unsold inventory keep holding builders back. CMHC | Globe and Mail

Retail & Wholesale Services Price Indexes, May 2026 — Both service-sector price gauges landed in today's Daily, offering a read on margin and input-cost pressure moving through the distribution chain that feeds construction supply. Statistics Canada

FROM THE ECONOMISTS

RBC Economics — Bank of Canada July Meeting Recap — Reads the hold as a steady stance with forecast revisions; expects 2.25% to hold through year-end before a gradual climb toward 3.25% by the end of 2027.

TD Economics — Bank of Canada Interest Rate Announcement — Sees the Bank parked at 2.25% for the balance of 2026, with cuts off the table unless the oil shock reverses.

Scotiabank Economics — The Contrarian Call — The outlier: Scotiabank now expects the next move to be up, seeing hikes of up to 0.75% that would take the rate to 3.0% before year-end if energy-fed inflation sticks.

WORTH WATCHING

U.S. Section 122 Surcharge Deadline — Washington's 10% surcharge on non-CUSMA-compliant Canadian goods is set to lapse around July 24 unless extended. A renewal — or an escalation — would ripple straight into cross-border material costs. Finance Canada

Alberta's West Coast Pipeline Move — Alberta is expected to reveal its next step on a proposed west-coast oil pipeline — a potential mega-project test of Ottawa's fast-track resolve. EnergyNow

BoC Next Decision — September 2. Any further Middle East escalation that pushes crude higher could force the Bank's hand — and validate Scotiabank's hawkish call.

IN BRIEF

ConstructConnect — Meta to build $13B data centre north of Edmonton — Meta's first Canadian data centre, in Sturgeon County, is slated to create 3,000 construction jobs and cements Alberta as a magnet for hyperscale build-out.

Tariff Watch — Steel and aluminum still carry 50% U.S. Section 232 tariffs, and industry estimates put the combined tariff/counter-tariff hit at 8–12% on total project costs depending on material mix — a persistent tax on every Canadian build.