By Erik Hertzberg<\/p>\n
(Bloomberg) \u2014 The Bank of Canada is likely to raise interest rates at its next two meetings as the Middle East conflict creates the risk of broader price pressures, a senior macro strategist at Manulife said.\u00a0<\/p>\n
It\u2019s a change from the firm\u2019s longstanding view that the central bank would remain on hold through the end of this year. Its base case had been for rate hikes to begin in mid-2027, but \u201cinflation dynamics are changing,\u201d strategist Dominique Lapointe wrote in a report to investors.<\/p>\n
Core measures of inflation \u201chave grown close to 3% month-over-month annualized for two consecutive months,\u201d Lapointe said. \u201cWhile this momentum cannot be tied to Iran-related supply chains, the prolonged state of the conflict makes it increasingly likely that so-called \u2018second-round\u2019 effects will eventually show up in core goods prices.\u201d<\/p>\n
Lapointe also pointed to the low likelihood of further escalation by Canada in the trade war with the U.S., which he said is \u201clikely to be reassuring\u201d to the central bank.\u00a0<\/p>\n
Higher tariffs and trade barriers have created hardship for specific Canadian industries such as steel and autos. But they haven\u2019t resulted in a recession or a broad rise in unemployment, and economic growth bounced back sharply in the second quarter.\u00a0<\/p>\n
\u201cBecause monetary policy cannot target specific industries (that is the government\u2019s job), the Governing Council is likely to conclude that trade tensions do not offset inflation risks in the near term and that slightly higher rates are required,\u201d Lapointe wrote.\u00a0<\/p>\n
The Bank of Canada\u2019s benchmark overnight rate has stood at 2.25% since October 2025.\u00a0<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n
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Bank of Canada<\/a> bloomberg<\/a> Dashboard<\/a> Dominique Lapointe<\/a> forecasts<\/a> interest rate forecast<\/a> interest rates<\/a> manulife<\/a> policy rate<\/a> tiff macklem<\/a><\/p>\n Last modified: September 25, 2026<\/p>\n","protected":false},"excerpt":{"rendered":"By Erik Hertzberg (Bloomberg) \u2014 The Bank of Canada is likely to raise interest rates at its next…\n","protected":false},"author":2,"featured_media":909478,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-909477","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/909477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=909477"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/909477\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/909478"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=909477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=909477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=909477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}