07:02 AM EDT, 09/17/2025 (MT Newswires) -- A 25bps rate is in the balance in Canada after the sharp United States tariff-induced slowdown in the economy in Q2 but the 1.6% seasonally adjusted annual rate (SAAR) contraction in GDP (exports -27%) wasn't miles away from the central bank forecast, said Societe Generale.

However, the labor market took a turn for the worse over the summer, with companies shedding jobs in July and August, noted the bank. The unemployment rate rose to 7.1%.

The inflation data of Tuesday for August was in line with the forecast, accelerating to 1.9% year over year for headline but ticking down to 3.0% year over year for core from a revised 3.1% in July.

The Bank of Canada is fine tuning policy inside the neutral range and hasn't changed policy for three meetings. The resilience of personal consumption could tempt the BoC to keep its powder dry and skip a cut at Wednesday's policy meeting, stated SocGen.

USD/CAD returned to the lower end of the six-week range around 1.3720. A break below this may trigger a decline towards next projections at 1.3600/1.3535, added the bank.