- July 15, 2025
- Posted by: Robert Marshall
- Category: Market News
Canadian inflation data released today showed the Consumer Price Index (CPI) rising 1.9% year-over-year in June, up from 1.7% in May. The acceleration in price growth has significantly reduced the likelihood of a July rate cut from the Bank of Canada, with markets now widely expecting policymakers to hold rates steady as they monitor inflationary pressures.
Meanwhile, Canada-U.S. trade deal negotiations are expected to ramp up ahead of President Trump’s August 1 deadline. Prime Minister Carney indicated today that any forthcoming agreement with the United States will likely include tariff provisions.
In the U.S., June CPI rose 2.7% year-over-year, up from 2.4% in May, offering clear evidence of tariff-related impacts on imported goods. Price increases were concentrated in categories such as fresh fruit and vegetables, household appliances, toys, clothing, and sporting goods, though this was partially offset by softness in housing-related costs. The data sharply reduced expectations for a July Federal Reserve rate cut, while also dampening the likelihood of a September move. Markets anticipate the Fed will remain in a wait-and-see stance until inflation shows more decisive progress toward its 2% target.
Fed Chair Jerome Powell reiterated that tariff uncertainty remains a key factor behind the central bank’s policy caution, noting that officials paused their rate-cutting cycle when tariff escalations intensified. Powell expects inflation to continue edging higher through the summer months and emphasized the Fed’s intention to carefully assess the extent to which tariffs filter through to consumer prices and broader economic growth before considering further policy adjustments. Following the inflation release, the U.S. dollar climbed to a 15-week high against the Japanese yen and DXY jumped up 0.53%.
In regional data, the Empire State Manufacturing Index rebounded sharply in July, rising to 5.5 from June’s -16.0. This marked its first positive reading since February, with improvements in both shipments and employment for a second consecutive month, an encouraging sign of resilience in the manufacturing sector.
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