A majority of economists now forecast a quarter-point increase to 2.5 percent at the Bank of Canada's October 28 decision, the bank's first move in a year, according to a Reuters poll of 34 economists conducted between October 21 and 23, in which 19 of them, or 56 percent, called the hike.
Source: Reuters poll via Wealth Professional, Oct 26
Markets have moved further than the economists. Brown Brothers Harriman strategist Elias Haddad said Canadian interest-rate swaps priced an 85% probability of an increase this week and expected the bank to begin a new tightening cycle with a 25-basis-point hike to 2.50%, after an unchanged policy rate since December 2025. Bloomberg data put the odds at 87 percent, up from 70 percent earlier that week, while The Globe and Mail reported overnight index swaps implying a 75 percent chance.
Source: BBH via FXStreet, Oct 26; Reuters poll via Wealth Professional
What changed the calls
The policy rate has stood at 2.25 percent since October 2025 and the bank has not raised rates since July 2023, but September inflation rose to 3.1 percent, barely above the bank's 1-to-3 percent target range, and its latest business outlook survey showed sharply rising inflation expectations in the run-up to a breakdown in trade talks with the United States. Governor Tiff Macklem told reporters on Saturday that quarterly inflation forecasts, due alongside the decision, were likely to be revised higher — remarks markets read as a hint a rise is coming — and he recently warned that “the risk that inflation broadens and becomes more persistent has gone up.”
Source: Reuters poll via Wealth Professional, Oct 26; BBH via FXStreet
Desjardins' Royce Mendes told Reuters the survey responses “suggest there are more serious inflationary pressures coming,” and BMO, the Royal Bank of Canada and Desjardins flipped their calls last week, while BMO strategist Benjamin Reitzes told Reuters the bank would “rather make the mistake of hiking a little bit too early” than fall behind the curve. Second-quarter real GDP grew at a 3.3% annualised rate, compared with the bank's 2.5% projection, BBH noted.
Source: Reuters via Wealth Professional, Oct 26
The case for waiting
Not everyone is convinced. Rabobank strategists Christian Lawrence and Molly Schwartz expect the bank to keep the rate at 2.25% on October 28 despite the market pricing, citing mixed labour-market data and inflation concentrated in shelter and energy, and forecast a hold through the next 12 months. Economists forecasting no move mainly cited a weak economy and subdued inflation pressures, Reuters reported, and RBC economists Frances Donald and Nathan Janzen wrote they held “very low conviction on the idea of a rate hike this soon,” saying the bank was almost equally likely to signal a hike in December or January instead.
Source: Rabobank via FXStreet, Oct 26; Reuters via Wealth Professional
What is solid
- A Reuters poll of 34 economists (Oct 21-23) found 19, or 56%, forecasting a quarter-point hike to 2.5% on October 28 (Reuters via Wealth Professional)
- The policy rate is 2.25%, unchanged since a cut in October 2025, with no hike since July 2023, and September inflation was 3.1% (Reuters via Wealth Professional)
What is only claimed
- Whether the bank actually hikes: swaps price 75-87% odds depending on the measure, but Rabobank forecasts a hold at 2.25% and some economists expect only a signal for December or January
Sixteen of 29 poll respondents, a 55 percent majority, forecast one more rise before March 2027, after which policymakers would hold at 2.75 percent — what Reuters reported would be the shortest Bank of Canada tightening campaign in 30 years. For Canadian households, including the large Punjabi diaspora, the October 28 decision lands directly on mortgage renewals and floating-rate loans.