Canada’s Economy Contracts Sharply; Markets Hope for Rate Cut
Posted on Aug 30, 2025 / World
Canada’s economy shrank a steeper-than-expected 1.6% annualized in Q2, mainly due to collapsing exports amid rising U.S. tariffs. Still, strong consumer and government spending helped cushion the blow. Markets immediately priced in a nearly 50% chance of a Bank of Canada rate cut this September. Despite the dip, Canada’s main stock index closed at a fresh record high, buoyed by gains in gold stocks and rate-cut bets. Investors seem optimistic that central bank easing is on the way to support growth. Experts warn that upcoming jobs and inflation data will be critical for the policy outlook.
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