Many economists are warning that the June inflation report won’t deliver a catalyst that would spur the Bank of Canada to start cutting interest rates again. Statistics Canada on Tuesday releases the consumer price index (CPI) for June and economists are calling for the overall inflation rate to accelerate 1.9 per cent from 1.7 per cent in May.

“For those looking for imminent (Bank of Canada) cuts, we doubt that the June CPI data will offer much support,” Nick Rees, head of macro research at Monex Europe Holdings Ltd., said in a note. “July easing bets of a cut priced by swap markets look too aggressive to us, absent further disinflation progress,” Rees said.

The Bank of Canada’s next interest rate decision is on July 30. It wants inflation to further slow down before it resumes cutting since lower rates tend to feed consumer demand and can cause prices to rise.

Rees said the gauges of inflation the Bank of Canada tracks most closely — core trim CPI and median CPI — are expected to hold around three per cent, which is at the top end of policymakers’ range.

RBC Economics posted a similar estimate for the Bank of Canada’s preferred inflation measures, which strip out indirect taxes.

“We expect month-over-month increases in the trim and median measures close to the 0.2 per cent increases posted for both in May. That would leave annual rates little changed from May and still be significantly above the (Bank of Canada)’s two per cent inflation target,” Nathan Janzen, assistant chief economist at RBC, said in a note on Friday.

RBC also said that absent food and energy, it expects headline inflation to accelerate 2.7 per cent in June from 2.6 per cent in May.

Headline inflation — the year-over-year figure that captures the entire CPI basket of goods — held steady in May at 1.7 per cent compared with April, but was significantly cooler than the 2.6 per cent posted in February.

However, the central bank’s preferred measures of inflation have sped up since the end of last year, from 2.5 per cent to three per cent year over year.

“We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval,” the Bank of Canada said in a statement accompanying its last rate announcement on June 4. “We will support economic growth while ensuring inflation remains well controlled.”

Policymakers have held rates at 2.75 per cent at each of the past two announcements after embarking on a cutting campaign in June 2024, when rates were five per cent.

During a recent speech at the St. John’s Board of Trade , Bank of Canada governor Tiff Macklem said tariffs are key to prices and inflation. But economists say there remains a lack of clarity on the effects that tariffs have had on the economy.

“We expect it is likely too early to see a significant increase in prices due to tariffs in Canadian and U.S. inflation data for June on Tuesday,” Janzen said.

He said there were signs that tariffs are causing prices for food and automobiles to rise as Canada imposed some retaliatory levies on U.S. goods and U.S.-made automobiles.

But “the broader impact of tariffs on prices has been limited,” Janzen said, adding that Canada paused tariffs on many targeted U.S. imports to avoid hitting businesses and consumers.

Almost 60 per cent of imports from the U.S. that were hit by Canadian counter levies were eligible for relief, according to an Oxford Economics Ltd. report in early June. A

more recent report by RBC placed that figure at 86 per cent. Derek Holt, vice-president and head of capital markets economics at the Bank of Nova Scotia, in a note on Monday, said the effects of tariffs can be spread out over “multiple quarters,” adding that “it’s a bit of a mystery as to why governor Macklem would place such emphasis upon two CPI reports before the July 30 decision.”

He said the longer tariffs hang around, the more slack that will create in the economy, an “affair” that could stretch out over one to two years.

“The competing effects of tariffs on Canadian inflation require vastly more than two lousy months of data to assess. In turn, this means that pre-emptively adjusting policy now could prove to be a mistake,” Holt said.

RBC has previously said it thinks the Bank of Canada is done cutting rates for this cycle.

Rees, however, said more cuts could come, possibly later this year.

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“We still see scope for a rate cut in September, but only after clearer signs that the recent uptick in price growth has begun to unwind, allowing the (Bank of Canada) to refocus on weakness elsewhere in the macro data,” he said.