The Bank of Canada faces a closely watched interest rate decision on Wednesday, with economists divided over whether rising inflation risks will prompt its first rate increase since 2023.<\/p>\n
A growing number of economists expect the central bank to raise its overnight rate by a quarter point to 2.50%, following a series of holds at 2.25%. Others expect the Bank to wait, pointing to softer employment and core inflation data, a weak housing market and the potential impact of U.S. tariffs on growth.<\/p>\n
In a Reuters poll conducted Oct. 21\u201323, 19 of 34 economists expected the Bank to raise its overnight rate to 2.50% on Wednesday.<\/p>\n
The Bank will announce its decision at 9:45 a.m. ET on Oct. 28, alongside its updated Monetary Policy Report. Its revised inflation and growth forecasts will be closely watched for clues about the path of interest rates beyond this week.<\/p>\n
The shift in expectations follows comments from Bank of Canada Governor Tiff Macklem, who said earlier this month that persistently high oil prices would lead the central bank to raise its inflation forecast.<\/p>\n
With the conflict in the Middle East ongoing and oil shipments still disrupted, \u201cthe risk that inflation broadens and becomes more persistent has gone up,\u201d Macklem told reporters, according to Reuters.<\/p>\n
Canada\u2019s annual inflation rate rose to 3.1%<\/a> in September, although the Bank\u2019s preferred core measures remained below 2%. Recent Bank of Canada surveys also showed higher inflation expectations among businesses and consumers.<\/p>\n Why some economists would wait<\/p>\n Even among economists forecasting a hike, some say the case for waiting remains strong. <\/p>\n RBC Economics expects a quarter-point increase on Wednesday, but says a hold that sets the stage for a later hike is almost equally likely.<\/p>\n The forecast reflects the Bank\u2019s recent messaging, its economists say, rather than an immediate need for higher rates. They point to a weak housing market and little evidence that energy costs are driving up core inflation.<\/p>\n At CIBC Capital Markets, chief economist Avery Shenfeld has also moved his forecast for a hike forward to October. But he says waiting until December or January would give the Bank more time to assess energy prices and Canada-U.S. trade relations.<\/p>\n \u201cWe aren\u2019t yet sure that ANY rate hikes will be warranted in the coming year,\u201d he wrote in an Oct. 26 report. Higher bond yields, he added, are already pushing up mortgage rates and weighing on housing activity.<\/p>\n Not every forecaster expects a move this week. TD Securities is calling for a hold at 2.25%. In a separate report last week, TD Economics\u2019 Maria Solovieva said planned business price increases were taking time to show up in consumer prices, giving the Bank little reason to raise rates.<\/p>\n Others see more reason to act. Scotiabank\u2019s Derek Holt has argued that the Bank should respond to forward-looking inflation risks, while National Bank economists also expect a quarter-point hike as oil prices remain high.<\/p>\n An increase on Wednesday could be followed by another in December, according to Oxford Economics, which expects the overnight rate to reach 2.75% by year-end.<\/p>\n What forecasters expect<\/p>\n What forecasters expect<\/p>\n Forecaster CIBC RBC National Bank Scotiabank TD Securities Oxford Economics Sources: Economist reports and published previews. Forecasts are subject to change.<\/p>\n Visited 1 times, 1 visit(s) today<\/p>\n Avery Shenfeld<\/a> Bank of Canada<\/a> bank of canada forecast<\/a> Bank of Canada preview<\/a> bank of canada rate decision<\/a> BoC preview<\/a> BoC rate decision<\/a> Dashboard<\/a> derek holt<\/a> interest rate forecast<\/a> interest rate forecasts<\/a> Maria Solovieva<\/a> rate decision<\/a> tiff macklem<\/a><\/p>\n Last modified: October 26, 2026<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of Canada faces a closely watched interest rate decision on Wednesday, with economists divided over whether…\n","protected":false},"author":2,"featured_media":947461,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-947460","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\/947460","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=947460"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/947460\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/947461"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=947460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=947460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=947460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n Oct. 28 call
\n Key reasoning<\/p>\n
\n \u2191 Hike
2.50%
\n Macklem\u2019s comments suggest an increase is likely, although CIBC argues the Bank could wait.<\/p>\n
\n \u2191 Hike
2.50%
\n Recent Bank communications point to concern over future inflation risks, though conviction in the timing is low.<\/p>\n
\n \u2191 Hike
2.50%
\n Higher expected oil prices and inflation risks support an increase.<\/p>\n
\n \u2191 Hike
2.50%
\n Forward-looking inflation risks warrant action despite softer monthly data.<\/p>\n
\n \u2014 Hold
2.25%
\n TD Economics says planned business price increases are taking time to show up in inflation data, giving the Bank little reason to raise rates.<\/p>\n
\n \u2191 Hike
2.50%
\n Higher oil prices are expected to prompt a pre-emptive increase, though it considers the decision a toss-up.<\/p>\n