- June 18, 2025
- Posted by: Melanie Scott
- Category: Market News
The Federal Reserve held its benchmark rate steady at 4.50%, where it has remained since December, as expected. The FOMC remains split over forecasting for the remainder of the year, with 8 policymakers expecting two cuts, 2 expecting one cut and 7 forecasting no rate cuts before the end of 2025. Policymakers weighed signs of a cooling U.S. economy against heightened inflation risks stemming from ongoing U.S. tariffs and rising geopolitical tensions in the Middle East. President Trump hinted at potential U.S. military involvement in the conflict, while Iran’s leader issued a stern warning, rejecting cease-fire demands and threatening “irreparable damage” if the U.S. joins Israeli operations.
Early in the session, oil prices climbed on heightened geopolitical risk, with Brent crude reaching a session high above $76/bbl, before retreating later in the day. WTI crude is now trading near $73.21/bbl, easing immediate support for the Canadian dollar.
U.S. weekly jobless claims fell to 245K, down from 250K last week and slightly better than the 246K forecast. However, while fewer Americans filed for unemployment benefits, the sustained high level of claims points to continued labour market struggles and soft economic momentum. Permits for single-family housing fell to a two-year low as builders contend with higher costs driven by tariffs on materials such as lumber, steel, and aluminum. Additionally, U.S. retail sales dropped unexpectedly by 0.9% in May, the sharpest decline in four months.
In the UK, year-over-year CPI eased slightly to 3.4% in May from 3.5%, though still above the 3.3% forecast. This underscores persistent inflationary pressure, with the headline rate remaining at its highest level in over a year. The Bank of England will announce its latest policy decision tomorrow, and markets widely anticipate no change, keeping the official bank rate at 4.25%.
In Canada, Statistics Canada reported a sixth consecutive quarter of slowing population growth following reduced temporary and permanent immigration targets set in 2024. From January to April 2025, the population increased by just 20K. Meanwhile, the Canadian labour market showed further signs of strain as job vacancies declined 3.8% in Q1 from the previous quarter and fell 18.1% year over year, with U.S. tariff impacts increasingly felt across multiple sectors.
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