- The Bank of Canada (BoC) kept its policy rate unchanged at 2.75%
- The U.S. Federal Reserve also held its rate steady at 4.25%–4.50% in a 9–2 vote following a two-day policy meeting
- Brianne Gardner: “Dividend-paying sectors like utilities, telecom, and real estate stand to benefit most from easing rates—a trend reflected in the Canadian market’s relative outperformance so far in 2025.”
- “We’re not out of the woods yet,” Gardner said. “But there’s opportunity ahead if you know where to look.”
- The Bank of Canada will announce its next rate decision on September 17.
Content for this article is from the above Expert Exchange interview with Brianne Gardner, Senior Wealth Manager at Velocity Investment, Raymond James. She covers the recent BoC and U.S. Fed Rate decision, inflation and global trade.
This article is a journalistic opinion piece which has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
BoC and U.S. Fed Rate decision
The BoC and U.S. Fed have announced their July 2025 rate decisions.
Both governments have held their benchmark interest rates steady this week, reinforcing a wait-and-see approach as both economies navigate trade uncertainty, uneven inflation trends, and diverging growth paths.
The decisions—widely expected by economists—signal cautious optimism from policymakers, but also highlight growing concerns around global demand.
“The Bank is tilted toward cutting rates further, especially in Canada,” said Gardner. “They’re waiting for clarity on trade negotiations, particularly between Canada and the U.S., before making the next move.”
Brianne Gardner, Senior Wealth Manager at Velocity Investment, Raymond James
The Bank of Canada’s overnight rate remains at 2.75%, with another possible cut on the table later this year if core inflation continues to soften or job losses worsen. Governor Tiff Macklem cited “clouded” economic conditions, elevated inflation pressures, and trade uncertainty—especially from U.S. tariffs—as influencing the decision.
Meanwhile, south of the border, the U.S. Federal Reserve also held its rate steady at 4.25%–4.50% in a 9–2 vote following a two-day policy meeting. While only two governors dissented—the first time since 1993.
Global Growth Expectations Dampened by Tariffs
Gardner pointed to current tariff conditions as a key factor weighing on global economic momentum, projecting a modest slowdown in global growth to around 2.5% by the end of 2025.
“In the current tariff scenario, we expect GDP growth to stabilize in the second half of the year, and potentially rebound heading into 2026 and 2027.”
Brianne Gardner, Senior Wealth Manager at Velocity Investment, Raymond James
If trade tensions ease, that rebound could come sooner, with exports and household spending acting as growth drivers.
Markets React Cautiously to BoC and U.S. Fed Rate decision
For investors, the hold in rates has mixed implications. Higher rates tend to pressure stock valuations, especially in capital-intensive sectors, while lower rates typically support earnings growth and boost equity markets.
“When borrowing costs come down, businesses find it easier to grow and expand,” Gardner explained. “That helps increase future earnings potential and lifts stock prices.”
She noted that dividend-paying sectors like utilities, telecom, and real estate stand to benefit most from easing rates—a trend reflected in the Canadian market’s relative outperformance so far in 2025.
Inflation Still a Watchpoint
While inflation has come down from pandemic highs, Gardner said the Bank of Canada remains cautious, especially as core CPI ticked up to 1.9% in June, and 2.5% when excluding taxes.
“The market is currently pricing in two more cuts in 2025, but it all hinges on inflation,” she said. “We’re in a bit of a wait-and-see mode.”
Brianne Gardner, Senior Wealth Manager at Velocity Investment, Raymond James
When asked about her thoughts on the BOC’s message, Gardner replied, “The Fed’s language shifted from describing economic activity as expanding at a ‘solid pace’ to ‘moderating,’ which some analysts view as a dovish sign.”
She noted that markets are paying close attention to these linguistic changes, even as Fed Chair Jerome Powell remains noncommittal ahead of the next rate decision in September.
The next BoC and U.S. Fed rate decision will be set September 17.
Trade Policy Driving Long-Term Risk
Beyond monetary policy, Gardner warned that trade developments will likely dictate the pace and direction of future rate moves. While Canadian exports and consumer spending have recently stabilized, economic slack may persist well into 2026 if tariffs remain elevated.
Meanwhile, the U.S. economy is showing signs of resilience, with GDP growing at 3% annually in the April–June quarter—up from a contraction in Q1.
“There’s a strong case for rate cuts in the U.S. as well,” said Gardner. “We’re seeing inflation contained and domestic demand softening, despite solid headline numbers.”
She added that import surges driven by tariff concerns continue to distort quarterly data, and companies are still working to reposition supply chains accordingly.
Rate Outlook
As of mid-year, both central banks appear hesitant to move too quickly amid global uncertainty. For investors, the key takeaways are clear: monitor inflation data, track trade developments, and look to interest-sensitive sectors for potential upside.
“We’re not out of the woods yet,” Gardner said. “But there’s opportunity ahead if you know where to look.”
For more from Brianne Gardner, check out her 2025 companies of interest.
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