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Bank of Canada to Focus Next on CPI After July's Strong Labor Report, UBS Says

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The Bank of Canada's next key focus will be July consumer price index data, following a stronger-than-expected Labour Force Survey that showed employment improved last month, according to a UBS Global Research note.

The July unemployment rate fell to its lowest level since July 2024, while the participation rate edged higher.

Meanwhile, slower nominal wage growth points to some easing in labor-market pressures, wrote UBS in a note dated Friday but made available to media on Monday.

Friday's LFS "likely adds to the better domestic picture noted by the Bank of Canada at the July meeting but we don't think that this undoes the on hold stance of the BoC," UBS economists wrote in the note.

The next key data point will be July CPI, due Aug. 17. The bank forecasts the report will show further progress on headline inflation, while core inflation remains contained.

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