{"id":489875,"date":"2026-06-09T01:41:15","date_gmt":"2026-06-09T01:41:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/489875\/"},"modified":"2026-06-09T01:41:15","modified_gmt":"2026-06-09T01:41:15","slug":"as-consumers-struggle-should-the-bank-of-canada-hike-hold-or-cut-rates-national","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/489875\/","title":{"rendered":"As consumers struggle, should the Bank of Canada hike, hold or cut rates? – National"},"content":{"rendered":"

The Bank of Canada<\/a> is widely expected to keep borrowing rates unchanged this week, according to several economists, who also believe a rate hike in the coming months is more likely than a cut.<\/p>\n

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That comes as consumers struggle with the high cost of living<\/a> and after recent economic data showed a technical recession.<\/a><\/p>\n

The Bank of Canada has kept its benchmark policy rate at 2.25 per cent since October 2025, even as U.S. tariffs and the Iran war have hammered the economy and job market.<\/p>\n

\u201cFor the first time in a while, the Bank of Canada\u2019s next move doesn\u2019t seem so obvious,\u201d Clay Jarvis, a mortgage expert at NerdWallet Canada, said in a note.<\/p>\n

\u201cUnder normal circumstances, today\u2019s sagging economy might call for the stimulative jolt of a rate cut. But it\u2019s hard to justify cutting the overnight rate when an aimless war is fuelling inflation.\u201d<\/p>\n

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Royal Bank of Canada Economics said in a note penned by assistant chief economist Nathan Janzen and economist Abbey Xu that it expects the Bank of Canada to \u201cremain cautious\u201d and keep rates on hold for the rest of 2026, but could start ticking up in 2027.<\/p>\n

\u201cYou\u2019ll see gradual improvement in the per-person economic backdrop this year, and the unemployment rate moving lower,\u201d said Janzen, speaking to Global News.<\/p>\n

\u201cIt would be a good news story if they [the Bank of Canada] are hiking in 2027 because it means that the economic backdrop is firmer than it is today.\u201d<\/p>\n

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The Parliamentary Budget Officer released an economic outlook on June 4, and said it also expects rates to start rising into next year.<\/p>\n

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\u201cAs supply disruptions arising from the Middle East conflict ease and inflation returns toward the Bank of Canada\u2019s 2 per cent target, we expect the Bank will gradually raise its policy rate, reaching 2.50 per cent in mid-2027 and returning to its estimated neutral level of 2.75 per cent by the end of 2027,\u201d the outlook said.<\/p>\n

Other economists think those hikes could come even sooner than next year.<\/p>\n

\u201cLeft shrugging their shoulders for now will be the Bank of Canada this week as it stays on hold and in monitoring mode,\u201d Derek Holt, senior vice-president and head of capital markets economics at Scotiabank, said in a written note.<\/p>\n

\u201cA pressure cooker of developments is likely to build over 2026H2 [July through December] that could pivot the BoC toward our long-held hike call.<\/p>\n

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\u201cOur forecast is for 50bps [0.5 per cent] of hikes in 2026Q4 [October through December] and another in early 2027 ending at a nominal policy rate of three per cent.\u201d<\/p>\n

\t\t\t\tHow the Bank of Canada determines rates\n\t\t\t\t\t\t<\/p>\n

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The Bank of Canada\u2019s mandate and core responsibility is to \u201cpromote the economic and financial welfare of Canada.\u201d Its primary lever, which can influence changes in the economy, is adjusting its monetary policy \u2014 effectively, changing borrowing costs for Canadians.<\/p>\n

Cutting rates can spur economic growth by making borrowing money more affordable for things like mortgages and business loans, but if rates are too low, then inflation could mean higher prices for goods and services.<\/p>\n

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Raising rates increases the cost to take out a loan, and potentially slows the economy down. This is often done when inflation gets out of control, but if rates are too restrictive, then it could risk causing a recession if the economy slows too much.<\/p>\n

Balancing monetary policy is something the bank\u2019s governing body calculates at each policy meeting \u2014 including this week. These meetings are conducted regularly to determine if rates should stay the same, rise or fall based on recent economic data and analysis.<\/p>\n

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Gross domestic product (GDP) is one of the key gauges the Bank of Canada uses to determine monetary policy, and although the most recent report showed Canada is in a technical recession, senior deputy governor Carolyn Rogers has cautioned that \u201cI think we need to be careful not to put too much weight in any one indicator.\u201d<\/a><\/p>\n

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Rogers also highlighted that the preliminary estimates for GDP in April point to a bit of a rebound in the economy, and this was another reason to be cautious when using the \u201crecession\u201d label.<\/p>\n

The job market showed some positive signs on Friday, with May\u2019s Labour Force Survey<\/a> showing the unemployment rate fell to 6.6 per cent from 6.9 per cent in April, and 88,000 jobs were added.<\/p>\n

Although gas prices had fuelled a higher headline inflation reading of 2.8 per cent in April<\/a>, core or underlying measures had actually fallen from 2.2 to two per cent.<\/p>\n

The bank\u2019s target range for inflation is one to three per cent.<\/p>\n

\u201cSome will point to our newly uncovered technical recession as justification for a cut, but I think inflation is still the Bank\u2019s priority,\u201d Jarvis said. \u201cIf that\u2019s the case, they\u2019ll hold the overnight rate next week and preserve a status quo that feels increasingly queasy.\u201d<\/p>\n

The Bank of Canada is scheduled to announce its updated policy on Wednesday at 9:45 a.m. eastern time, with a press conference to follow.<\/p>\n

\n\t\t&copy 2026 Global News, a division of Corus Entertainment Inc.\t<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of Canada is widely expected to keep borrowing rates unchanged this week, according to several economists,…\n","protected":false},"author":2,"featured_media":489876,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[1789,72,289,1312,113,61,5232,60],"class_list":["post-489875","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bank-of-canada","tag-business","tag-canada","tag-consumer","tag-economy","tag-ie","tag-interest-rates","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/489875","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=489875"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/489875\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/489876"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=489875"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=489875"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=489875"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}