Normally in the lead up to a Bank of Canada rate announcement, economists are of one mind as to whether the bank will hold its rate, lower it, or raise it, but opinions vary on what it will do at its next announcement. The bank cut its rate to 2.25% on Oct. 29, 2025, and has held it steady for the last seven rate announcements. “With just over a month to go until the Bank of Canada’s next decision on Oct. 28, markets now see that meeting as a coin flip. Odds have fluctuated sharply over the past few weeks but stood narrowly in favour of a hike as of Thursday afternoon,” reports MoneySense, adding overnight index swap markets are predicting roughly a 50% to 60% chance of a 25-basis-point interest rate hike. “While many economists remain unconvinced that the central bank will raise the cost of borrowing this year, concerns that inflation could become a more persistent thorn than first thought have some pencilling in a tightening cycle to start in early 2027.”.Speaking at the MortgageFest Canada convention in Mississauga on Wednesday, Derek Burletin, vice-president and deputy chief economist at TD Bank Group, said he thinks markets are pricing in four or more rate hikes in Canada, while he believes there will be none. He said the Bank of Canada "is going to be able to kind of sit on its hands," adding if the bank did hike its rate, "we don’t see it hiking by three or four times as the market expects." Economists and mortgage brokers feel the bank will follow the lead of the US Federal Reserve, which raised rates on Sept. 16 for the first time in more than three years, based on bond yields rising, which they have also done in Canada. "I just want to say that yields are reflecting a little bit of this ‘paint-all-countries-with-one-brush.’ Be careful," said Burleton, arguing the two economies are performing differently. “US core inflation is running above 3%, while Canada's is close to the bank's 2% target,” he said..Claire Fan, senior economist at RBC Economics, and Randall Bartlett, deputy chief economist at Desjardins, expect the bank will hold at both of its remaining announcements this year (the final announcement will be Dec. 9) with a rate hike early in 2027. Earlier this week, Bank of Canada Governor, Tiff Macklem, said the bank’s governing council is keeping a close watch on energy prices, which have been driven higher by the Middle East war, and could push inflation above 3%, which would normally cause a rate hike. At the same the US/Canada tariff war threatens to slow fourth-quarter growth below 1%, which would normally call for a rate hold. Stephen Brown, chief North America economist at Capital Economics, said in a note to clients Thursday that the bank will “inevitably upgrade its inflation forecasts” to account for elevated oil price projections when it publishes its quarterly updated outlook at the end of next month.
