The Bank of Canada is expected to leave the policy rate unchanged at 2.25% at its 28 October meeting, even though markets are pricing roughly 20bps of tightening. The view reflects a preference to wait for clearer evidence that higher oil prices are feeding through into core inflation, alongside uncertainty around growth and the effects of new trade tensions.
Outlook For Future Rate Hikes
Further tightening is still pencilled in. Rate increases are now anticipated in December and January, brought forward from a prior profile of January and March, and the terminal rate is seen near 2.75%. Any October hold is expected to be paired with firmer guidance to prepare markets for imminent hikes, following recent hawkish messaging from Governor Macklem after IMF meetings in Thailand.
