Could inflation fears push the Bank of Canada toward its first hike since 2023?
“So my hunch right now is: not before 2027. Our previous forecast was mid-2027. We may bring that forward a little, so maybe end of Q1, early Q2 2027, but I don’t see anything this year.”
Douglas Porter, chief economist at BMO Capital Markets in Toronto, acknowledged the divided outlook.
“If anything, the threat of higher inflation has rekindled chatter of a potential rate hike in 2026,” Porter said.
“We still view that as a very long shot indeed, with the economy struggling to grow, core inflation moving closer to the 2% target, and USMCA uncertainty still clouding the outlook.”
What the October 28 decision means for mortgage brokers
Donald and Janzen argue a 25-bps move on Wednesday would not materially alter the medium-term economic picture – their base case already assumes 100 basis points of rate increases in 2027.
