10:26 AM EST, 11/21/2025 (MT Newswires) -- Each of National Bank, Desjardins, TD Economics and CIBC on Friday said the Bank of Canada is likely to remain on hold with its benchmark interest rate next month following the release of the Canadian retail sales figures for September, and an advance reading for October.

National Bank noted today's retail sales update marked the last major release that will inform third quarter GDP, which will be released next week. Based on earlier data, it noted, the Canadian economy is poised to expand by a modest near 0.5% annualized. National Bank said the retail sector's weakness in September "doesn't change that much". It also noted this growth picture is in line with what the BoC had projected in its October MPR which means the central bank's stance won't change next month.

"Looking ahead to Q4, September's weakness doesn't provide a particularly strong hand-off and StatCan's October flash estimate for nominal sales suggests no growth. In real terms, that's likely to be negative as the October CPI reported goods prices were rising. We're likely to see below-potential growth continue into Q4," National Bank added.

According to Oskar Stone at Desjardins, October's flash reading indicates that receipts were likely flat over the month. But he said with goods prices falling, this suggests that volumes rose at the start of Q4. Desjardins Q3 GDP tracking remains roughly in line with the BoC's forecast of 0.5%. "That said, retail sales remain choppy, with slowing population growth and trade tensions stateside likely contributors. It is worth noting that increased volatility in spending can sometimes signal turning points in economic data. However, this release doesn't significantly change our outlook on the Canadian economy, and as such we continue to anticipate that the Bank of Canada will remain on hold at the upcoming December meeting."

TD's Maria Solovieva's said retail sales are "heading into the holiday season on shaky footing", while noting September recorded a renewed decline, and early signals point to a flat reading in October. "Despite recent volatility, the underlying trend is weaker real spending with major categories now in outright contraction," Solovieva said, although she added: "Some good news comes from our internal credit and debit card data, which continues to point to relatively healthy gains in services spending, especially travel and recreation."

TD expects real personal spending growth to drift to a below trend pace in the second half of 2025, with Q3 consumption tracking in a flat to 0.5% range. "At this stage," Solovieva said, "the Bank of Canada has largely priced in this softer demand profile, giving policymakers sufficient justification to remain on hold."

Over at CIBC, Andrew Grantham said earlier that Friday's retail sales data doesn't change the view that the BoC will move to the sidelines and hold interest rates steady at its December meeting.

Grantham noted Canadian retail sales fell as expected in September, and advance data suggested there was no rebound to be seen in October. However, he said the details were "a little more positive", with much of the headline drop driven by the volatile auto component.

Among highlights, Grantham noted core sales (ex auto and gasoline) were little changed on the month, with gains in sporting goods and food stores offset by declines in building equipment and clothing. Total retail sales volumes fell by 0.8% in September, and were down by a modest 0.3% (unannualized) for Q3 as a whole, although that decline follows solid growth earlier in the year. The advance estimate for October suggested headline sales were little changed to start Q4.

"Overall," Grantham said, "Canadian consumer spending doesn't appear to be particularly strong, but also isn't as weak as we would likely have expected given an unemployment rate close to 7%."