Economists brace for Bank of Canada hike, but some urge patience

The Bank of Canada faces a closely watched interest rate decision on Wednesday, with economists divided over whether rising inflation risks will prompt its first rate increase since 2023.

A growing number of economists expect the central bank to raise its overnight rate by a quarter point to 2.50%, following a series of holds at 2.25%. Others expect the Bank to wait, pointing to softer employment and core inflation data, a weak housing market and the potential impact of U.S. tariffs on growth.

In a Reuters poll conducted Oct. 21–23, 19 of 34 economists expected the Bank to raise its overnight rate to 2.50% on Wednesday.

The Bank will announce its decision at 9:45 a.m. ET on Oct. 28, alongside its updated Monetary Policy Report. Its revised inflation and growth forecasts will be closely watched for clues about the path of interest rates beyond this week.

The shift in expectations follows comments from Bank of Canada Governor Tiff Macklem, who said earlier this month that persistently high oil prices would lead the central bank to raise its inflation forecast.

With the conflict in the Middle East ongoing and oil shipments still disrupted, “the risk that inflation broadens and becomes more persistent has gone up,” Macklem told reporters, according to Reuters.

Canada’s annual inflation rate rose to 3.1% in September, although the Bank’s preferred core measures remained below 2%. Recent Bank of Canada surveys also showed higher inflation expectations among businesses and consumers.

Why some economists would wait

Even among economists forecasting a hike, some say the case for waiting remains strong.

RBC Economics expects a quarter-point increase on Wednesday, but says a hold that sets the stage for a later hike is almost equally likely.

The forecast reflects the Bank’s recent messaging, its economists say, rather than an immediate need for higher rates. They point to a weak housing market and little evidence that energy costs are driving up core inflation.

At CIBC Capital Markets, chief economist Avery Shenfeld has also moved his forecast for a hike forward to October. But he says waiting until December or January would give the Bank more time to assess energy prices and Canada-U.S. trade relations.

“We aren’t yet sure that ANY rate hikes will be warranted in the coming year,” he wrote in an Oct. 26 report. Higher bond yields, he added, are already pushing up mortgage rates and weighing on housing activity.

Not every forecaster expects a move this week. TD Securities is calling for a hold at 2.25%. In a separate report last week, TD Economics’ Maria Solovieva said planned business price increases were taking time to show up in consumer prices, giving the Bank little reason to raise rates.

Others see more reason to act. Scotiabank’s Derek Holt has argued that the Bank should respond to forward-looking inflation risks, while National Bank economists also expect a quarter-point hike as oil prices remain high.

An increase on Wednesday could be followed by another in December, according to Oxford Economics, which expects the overnight rate to reach 2.75% by year-end.

What forecasters expect

What forecasters expect

Forecaster	Oct. 28 call	Key reasoning
CIBC	↑ Hike 2.50%	Macklem’s comments suggest an increase is likely, although CIBC argues the Bank could wait.
RBC	↑ Hike 2.50%	Recent Bank communications point to concern over future inflation risks, though conviction in the timing is low.
National Bank	↑ Hike 2.50%	Higher expected oil prices and inflation risks support an increase.
Scotiabank	↑ Hike 2.50%	Forward-looking inflation risks warrant action despite softer monthly data.
TD Securities	— Hold 2.25%	TD Economics says planned business price increases are taking time to show up in inflation data, giving the Bank little reason to raise rates.
Oxford Economics	↑ Hike 2.50%	Higher oil prices are expected to prompt a pre-emptive increase, though it considers the decision a toss-up.

Sources: Economist reports and published previews. Forecasts are subject to change.

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Last modified: October 26, 2026