Macklem’s latest comments suggest a BoC rate hike could be ahead
“Two things probably have to happen if you’re too slow: One is, you’re going to have to raise rates very quickly,” he said.
“And secondly, you’re probably going to end up having to raise them more than if you moved earlier because things will have gotten more out of hand.”
The two-year Government of Canada bond yield rose more than 40 basis points over the past month as fixed-income traders priced in rate increases.
Douglas Porter, chief economist at BMO Capital Markets in Toronto, acknowledged that the inflation threat had “rekindled chatter of a potential rate hike in 2026,” while maintaining that a weak economy and unresolved United States–Mexico–Canada Agreement (USMCA) uncertainty made an increase “a very long shot indeed.”
The latest Bank of Canada minutes show growing concern about energy prices, inflation risks, and trade uncertainty. Tiff Macklem of the Bank of Canada and Leslie Preston of TD Economics weigh in on the outlook.https://t.co/7EBVbT9OBI
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 18, 2026
Trade drag complicates the picture
The new US tariffs in place cover roughly 5% of Canadian goods exports. If they hold, the Bank estimates fourth-quarter growth could slow to below 1% annualized.
