Canada’s inflation rate rose to 2.4 per cent in September, up from 1.9 per cent a month earlier, adding pressure ahead of the Bank of Canada’s rate decision next week. Despite the increase, market sentiment remains optimistic, driven by strong earnings and resilient growth expectations.
BNN Bloomberg spoke with Sadiq Adatia, chief investment officer at BMO Global Asset Management, who said inflation is not a major concern for policymakers and that a rate cut remains likely. He also noted continued strength in U.S. equities and technology stocks, while gold’s pullback could offer a new buying opportunity.
Key Takeaways
- The Bank of Canada is still expected to cut interest rates despite inflation rising to 2.4 per cent in September.
- Policymakers remain focused on economic growth amid weaker employment and global trade uncertainty.
- Corporate earnings continue to surprise on the upside, led by strong results in financials and technology.
- Gold’s recent pullback is seen as profit-taking, with prices expected to reach new highs in 2026.
- Investors remain overweight on equities, particularly in the U.S., and see technology as a long-term growth driver.
Read the full transcript below:
LINDSAY: Inflation accelerated in September, jumping to an annual rate of 2.4 per cent from 1.9 per cent in August. For more on how that could affect the Bank of Canada’s rate decision later this month and how investors are positioning in the current environment, we’re joined by Sadiq Adatia, chief investment officer at BMO Global Asset Management. It’s good to have you today. Thanks for taking the time.
SADIQ: Thanks for having me.
LINDSAY: Now that we’re seeing these numbers coming out today — 2.4 per cent — do you expect the Bank of Canada will still cut interest rates next week?
SADIQ: I do. What we’re seeing is just a point in time where inflation looks a little higher than expected, but I don’t think inflation is really the story the Bank of Canada is too concerned with at the moment. It’s more about the economy and making sure that, given tariffs and other headwinds we’re seeing in Canada’s economy, we continue to spur growth and consumer spending. Cutting interest rates makes a lot of sense.
On top of that, I don’t think the Bank of Canada or the U.S. Federal Reserve would have cut rates previously if the expectation was to do it once and stop. I think their plan was to continue unless data points really changed their outlook, and I don’t think this one data point will do that.
LINDSAY: So you don’t think the 2.4 per cent inflation rate is a cause for concern?
SADIQ: I think they’ll watch it carefully and see the trend going forward, but I don’t think it should stop them from cutting rates.
LINDSAY: Let’s take a broader look at the markets. How are you positioned right now, and is there anything in earnings season that’s caught your attention?
SADIQ: Overall, the earnings story has been really strong. Last week we saw great results from the big financials — those heavyweights are showing solid earnings and growth. Coca-Cola reported strong numbers as well, and I expect technology companies to deliver very good results.
Hopefully we’ll also see continued research and development spending and capital expenditures that help drive future growth. The one thing to watch will be CEO outlooks — whether they reflect confidence in the consumer and how the ongoing tariff situation unfolds. There’s still uncertainty on the final structure of tariffs, and that could influence whether companies hold back on spending or continue business as usual. Right now, though, we see good earnings momentum and expect markets to move higher from here.
LINDSAY: You mentioned some companies could hold back on spending given the uncertainty. Are there particular sectors where that’s more likely?
SADIQ: The consumer sector is probably the most sensitive, especially in the U.S., since it’s closely tied to what happens in China. If tariffs continue to escalate, that would have a bigger impact there. Companies could become more cautious.
We also have to be mindful of the USMCA deal coming up for negotiation. The question is how that plays out. When we were at the BMO U.S.-Canada Summit, both politicians and CEOs were optimistic, which is encouraging, but there’s still a lot of uncertainty. That could make some Canadian companies hesitant to invest until there’s more clarity on the trade front.
LINDSAY: Going back to earnings, if tech continues to show strength, will that justify you staying bullish on that sector?
SADIQ: Absolutely. The tech story isn’t just a one- or two-quarter story — it’s a much longer-term trend. We’re seeing consistently strong results. The only concern is that expectations are quite high, so we could see some short-term pullbacks if results don’t exceed those expectations. But that would likely be a buying opportunity.
These companies have solid outlooks, strong balance sheets and are leading in key themes such as artificial intelligence and cloud computing, which continue to drive markets globally, especially in the U.S.
LINDSAY: Let’s turn to gold and silver. Prices have dropped sharply to their lowest levels in about four years. What’s behind that, and how does it fit into the broader market story?
SADIQ: We’ve been owners of gold since 2023, so we’ve benefited from a great run-up. What we’re seeing now is profit-taking after those gains and some portfolio rebalancing. Improved sentiment on U.S.-China trade relations could also be a factor — people hold gold as a hedge against uncertainty and against the U.S. dollar.
We’ve seen the U.S. dollar strengthen recently, and with better trade news, it’s natural to see gold pull back. But I think this is a good buying opportunity. We remain bullish on gold and expect to see new highs in 2026. Silver is similar — it lags gold but follows the same trends, and supply constraints could help support prices. I wouldn’t be surprised to see a short pause before the next move higher, similar to what we saw last year.
LINDSAY: So no need to panic for those holding gold or silver right now. That’s Sadiq Adatia joining us live. Thanks so much for your time.
SADIQ: Thanks for having me.
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This BNN Bloomberg summary and transcript of the Oct. 21, 2025 interview with Sadiq Adatia are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
