July inflation hits 3% — is a Bank of Canada rate hike next?
Following better-than-expected GDP growth, economists from TD Economics, CIBC Economics, RBC Economics, and BMO Capital Markets remain aligned that the Bank of Canada is likely to hold its policy rate steady.https://t.co/zC3DaNdf96
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 4, 2026
Hike risk grows for 2026
Yet not everyone is convinced the BoC can stay on the sidelines indefinitely. Scotiabank has forecast 50 basis points of rate increases in the fourth quarter of 2026 and a further hike in early 2027, warning in its July report that “underlying cost pressures continue to run at levels that are inconsistent with a comfortable return to target.”
That view stands at odds with most of Bay Street, but the July CPI print adds marginal weight to the hawkish case — and the question of whether a BoC rate hike is becoming more likely is increasingly being asked.
Sherry Cooper, chief economist at Dominion Lending Centres Group (DLCG), recently said that the central bank was unlikely to shift tone immediately.
“With wage growth decelerating further and energy prices more moderate, the Bank of Canada won’t take on a more hawkish tone yet, though a strengthening economic backdrop could eventually push it in that direction if it persists,” Cooper wrote.
Andrew Hencic, director and senior economist at TD Economics in Toronto, echoed that view after the June 10 BoC hold: “Given the competing forces on inflation, we expect the Bank of Canada to stay on hold through the balance of the year.”
