Steady Steps in Uncertain Times

Executive Summary

Interest rates nudged lower in Canada and the United States, global economic growth was positive but uneven, and commodity prices swung. Through it all, PMC’s investment approach stayed the same: focus on high-quality businesses over the long term. 

Bank of Canada: Easing carefully

The Bank of Canada’s key policy rate of 2.75% (since March 2025) was trimmed to 2.50% on September 17. The Bank’s message stayed measured: inflation is close to target, and the economy is holding up.  It will only ease further if the data supports it. For households and businesses, this means borrowing costs are edging downward but the path is likely to be gradual. 

The Canadian dollar: Drifts lower into quarter-end

The loonie softened a touch over the quarter as investors sought the U.S. greenback late in September. It ended Q3 at CAD/USD 1.3908 compared with CAD/USD 1.3622 at the end of Q2. A still solid U.S. dollar and oil drifting into the high USD 60s kept a lid on Canadian currency strength.

Policy backdrop in Ottawa 

With a minority Liberal government under Prime Minister Mark Carney, Ottawa’s priorities continue to centre on trade diversification, green investment and interprovincial trade-barrier reductions. While structural changes take time, policy direction remains toward greater domestic resilience and broader market access beyond the U.S. 

What changed globally

In the United States, growth slowed and by later summer, markets were leaning toward a rate cut. “The market is pricing a ‘significant chance’ the U.S. Federal Reserve will cut interest rates in September,” said Anish Chopra, Managing Director, Portfolio Management Corp. (Canadian Press, Aug. 22, 2025). Weeks later, the Fed delivered its first rate cut of 2025, lowering the target range to 4.00%-4.25%, and officials said they are still balancing high inflation with a cooler job market. A partial U.S. government shutdown at quarter-end raised the risk of delays to official economic data reporting. 

In Europe, the European Central Bank held rates steady in September as Euro-area inflation ticked up to 2.2% year over year. In the U.K., the Bank of England reduced its Bank Rate 25 basis points to 4.0% in August, the first cut since 2020. 

In China, factory activity was mixed but roughly flat compared with the second quarter of 2025. The central bank kept lending rates steady, trade improved for a third month, housing stayed soft, and the economy grew 5.3% in the first half of 2025.

Commodities and safe havens

Oil and gold took different paths. Brent crude settled near USD 67 on September 30, down from about USD 68 on June 30. Gold climbed toward fresh record highs as investors looked for safety, ending September 30 near USD 3,830/oz, up 17% since the end of Q2. Looking at the S&P/TSX Composite index, its year-to-date performance is not broad: it is gold led. The gold sector is up 108% year-to-date. 

What this means for you

Markets are ever-changing.  Central banks are cutting interest rates because growth is slowing, although economies are still expanding. In this environment, quality matters more than ever - strong balance sheets, durable cash flows and management teams that can adapt. 

• Stay focused on high-quality companies with health balance sheets. 
• Keep portfolios diversified across sectors and geographies. 
• Trim or add when valuations move materially away from fundamentals. 
• Hold liquidity to take advantage of buying opportunities that market volatility can create.

PMC will continue to monitor risks and opportunities and make measured adjustments with your long-term goals front and centre. 

Client Question Corner: 

What must I do with my LIRA and RRSP before the end of the year I turn 71? 

By December 31 of the year you turn 71, you are legally required to convert both your LIRA (Locked-In Retirement Account) and your RRSP (Registered Retirement Savings Plan) into retirement income options. 

Here’s what happens: 

1. LIRA: You must convert it into a LIF (Life Income Fund) or purchase a life annuity. These options continue to restrict withdrawals to minimum and maximum limits set by the CRA. 
2. RRSP: You must convert it into a RRIF (Registered Retirement Income Fund) or purchase an annuity or withdraw and pay tax on the entire balance remaining in the plan.
3. Consider maximizing your contributions to your RRSP before the end of the year you turn 71 as no contributions can be made thereafter.  
4. Minimum withdrawals will begin the following year.  

PMC in the News 

1. Anish Chopra interview with the Canadian Press: S&P/TSX composite jumps on Carney's tariff move and U.S. rate expectations | Business News | thecanadianpressnews.ca
2. Anish Chopra interview with the Canadian Press: S&P/TSX composite finishes higher on Monday, U.S. markets also rise | Business News | thecanadianpressnews.ca
3. Anish Chopra interview with the Canadian Press: Big tech names drive equity markets higher on AI enthusiasm after 'tougher week' | Business News | thecanadianpressnews.ca

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Commentary has been prepared by Portfolio Management Corporation (PMC) for informational purposes only and is not intended to provide any financial, tax, or investment advice, and does not take into account your particular investment objectives or financial situation. Before acting on any information, you should consider the appropriateness of the information and speak with one of our portfolio managers. This information has been drawn from sources believed to be reliable. All securities transactions involve risks, including the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. This commentary may contain forward-looking statements that are predictive in nature which reflect current views on expectations and market conditions. Readers are cautioned not to place undue reliance on these forward-looking statements. Portfolio Management Corporation does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect eh occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in the materially positive or negative manner. Past performance is not a reliable indication of future performance.