Canada’s next rate move may be a hike, not a cut, says RBC
Fan previously put it plainly: “We still don’t see the Bank of Canada cutting the overnight rate. The next move is more likely to be a hike although we don’t expect that until 2027.”
Why further easing looks unlikely
Two factors underpin RBC’s position. The first is structural: the US decision to impose 50% tariffs on 5% of Canadian imports on August 22, 2025, represents a supply-side shock.
The BoC has itself signalled that these tariffs could halve Q4 GDP growth to below 1% annualized, but the central bank views targeted federal fiscal support as a more effective instrument than a broad rate adjustment for disruptions of this nature.
Bank of Canada governor Tiff Macklem issued a stark warning Monday that a fresh round of US tariffs and elevated global oil prices risk undoing Canada’s hard-won economic recovery.https://t.co/k19n8NXNPd
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 22, 2026
The second factor is inflation. Elevated global oil prices and historically wide refinery margins have kept policymakers alert to any broadening in price pressures. That vigilance limits the BoC’s appetite to ease further, even as growth risk builds.
What brokers should be watching
Consumer data heading into Q4 tells a more resilient story than the July GDP figure suggests.
