Canadian Growth Faces H2 Slowdown as Bank of Canada Seen Holding Rates for Now, RBC Says

11:16 AM EDT, 09/28/2026 (MT Newswires) -- Strong second-quarter gross domestic product growth in Canada is unlikely to continue into the last half of the year as trade tensions with the United States weigh on activity, RBC Economics wrote in a note. The Bank of Canada has warned that new US tariffs could push already-weak fourth-quarter 2026 growth below a 1% annualized rate, wrote RBC in the Friday note. Canadian government support for trade-affected firms and workers should help cushion the impact, while targeted fiscal measures may prove more effective than monetary policy in addressing supply-side disruptions. At the same time, the BoC is watching for signs that high global oil prices and elevated refinery margins could push inflation higher more broadly, added the bank. RBC's base case remains that the BoC will keep rates unchanged in the near term before gradually resuming hikes in early 2027. Incoming data will be crucial for the October decision, which remains finely balanced, it said.