07:47 AM EST, 01/27/2025 (MT Newswires) -- Investors will get the advance reading on Canada's wholesale trade for December at 8:30 a.m. ET on Monday, noted Bank of Montreal (BMO).

There's plenty to chew on later in the week, with the monthly real gross domestic product report for November out on Friday. The bank is looking for a 0.1% decline in the month, consistent with a run of soft monthly indicators and Statistics Canada's initial flash.

BMO looks for a better early estimate for December and a Q4 estimate in the 1.5%-to-2% range.

However, the big show will be on Wednesday when the Bank of Canada makes its policy announcement on the same day as the Federal Reserve, pointed out BMO. At 9:45 a.m. ET Wednesday the BoC is expected to cut rates by 25 bps, with the threat of growth-sapping tariffs looming large in the decision.

Since the December meeting, the data have been mixed, with something to keep everyone happy. GDP growth looks to be on track to come in close to the BoC's October Monetary Policy Report projection of 2%, or perhaps a touch lower, added the bank.

The inflation data haven't been as friendly, unfortunately, stated BMO. While headline inflation was below 2% in December, that was entirely due to the tax holiday, as it popped back above the target excluding taxes. The BoC's core CPI metrics are stubbornly high as well. On the flip side, the breadth of inflation is consistent with past episodes of subdued price pressures.

All told, the inflation figures aren't definitively pointing to another cut and also aren't strong enough to preclude one, according to the bank. The takeaway is that the combination of an easing bias and tariff risk is expected to prompt a 25bsp cut from the BoC even if the data skew a bit more toward a pause.

Government of Canada yields were very modestly lower along the curve, with the 10-year starting the week at 4.5%, down about 13 bps in Monday's rally, said BMO. Headline inflation cooled a tick, to 1.8% year over year, but the core measures were firm again on a month-over-month basis. Excluding the inflation-dampening impact of the temporary GST cut, there appeared to be some underlying upward price pressure. While that, along with a very neutral Business Outlook Survey could easily argue for the BoC to stand pat this week, a possible looming tariff battle -- and the impact that is already having on business confidence -- should push them to ease.

The Canadian dollar (CAD or loonie) starts the week at $1.435/USD (69.7 US cents).