FICC Focus Macro Matters: US and Canada Monetary Policy Recap and Outlook
Oct 30, 2025
In this engaging discussion, Stuart Paul, an economist at Bloomberg Economics specializing in U.S. and Canadian markets, dives into key monetary policy insights. He emphasizes the terminal rate at 2.25% for Canada and addresses the impact of demographics and housing on inflation. The conversation also explores the Fed's recent meeting outcomes, Powell's nuanced messaging, and the influence of political factors on the Fed’s independence. The trio analyzes the future of monetary policy and its implications for market dynamics, making it a must-listen for finance enthusiasts!
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Bank Of Canada Likely At Terminal Rate
- Stuart Paul expects the Bank of Canada terminal rate at 2.25% and sees little room for further cuts.
- He cites two-way risks from a stimulative budget and productivity gains from AI against disinflationary demographics.
Monetary Policy Can't Fix Structural Shifts
- Macklem and others emphasize that monetary policy can't fix structural shocks like demographics or trade rewiring.
- Those forces act outside monetary channels and will drag on inflation irrespective of policy moves.
Monitor Budget And Issuance Risks For Canada
- Expect Canadian 10-year yields to trade roughly 30–314 basis point range driven by US 10s and positioning.
- Watch the Nov 4 budget and long-duration issuance as the primary risks to further steepening.