CIBC Warns of Economic Slowdown as Tailwinds Fade

CIBC, one of Canada's largest banks, expects a steady economy in May, but warns that this trend won't last. According to the bank, April's rebound carried over into May, with retail spending and housing-related activity driving growth.

While wholesale trade may have softened, CIBC predicts a decent second-quarter rebound, with June looking firmer due to stronger retail sales and a temporary boost from the FIFA World Cup. However, this growth is seen as a bridge rather than a new baseline.

The bank believes that growth will slow later in the year as these tailwinds fade and tariff uncertainty becomes a concern for businesses and households. This slowdown could impact interest rates, with CIBC arguing that the Bank of Canada can keep its policy rate unchanged for now due to subdued core inflation.