Bank of Canada Policy Announcement (Oct. 2026)

The Bank of Canada’s decision to raise the policy rate shows the balance of risks has now tipped towards the threat of energy-driven inflation over the downside risks from trade tensions. The Bank pushed back against hawkish market pricing, however, noting that a hold was considered at the meeting and that “there could be a need to increase the policy rate further” (our emphasis) but the high degree of uncertainty in the outlook meant Governing Council would “proceed carefully”. This supports our view that the tightening cycle will be limited to two more hikes next year.