Canada's Economy Slows Gradually Amid Q2 Growth

Canada's economy expanded at an annualized rate of 3.3% in Q2 2025, according to Statistics Canada data released on [Date]. This growth fell just short of market expectations of 3.4%. The quarterly expansion was supported by gains in services-producing industries, particularly finance and insurance, as well as continued strength in business investment.

However, consumer spending grew at a more moderate pace than in Q1, reflecting persistent cost-of-living pressures and elevated interest rates. Government spending also contributed positively to growth, while the housing market showed signs of stabilization after a volatile start to the year.

The slight miss against forecasts is unlikely to alter the Bank of Canada's policy trajectory, with financial markets still pricing in a high probability of an interest rate cut at the next policy meeting in September. The central bank has been navigating a delicate balance between curbing inflation and supporting economic growth, and today's data suggests the economy is cooling gradually rather than sharply.