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Bank of Canada Rate Hikes to Be Limited by Soft Economy, Report Says
Capital Economics forecasts only 0.50 percentage points of hikes as trade uncertainty and weak growth are expected to keep inflation contained.
- On Wednesday, Capital Economics published a report arguing that trade uncertainty and slowing immigration levels will likely restrict how high the Bank of Canada's benchmark interest rate rises next year.
- The Bank has maintained its benchmark interest rate at 2.25 percent throughout 2026 as it monitors how the U.S. trade dispute and war in Iran affect the economic outlook.
- Capital Economics forecasts the central bank will raise rates to 2.75 percent via two quarter-point hikes, well short of the roughly 1.25 percentage points of total hikes markets now expect before end of 2027.
- Real gross domestic product should rise 1.5 percent next year as infrastructure projects gain steam, though Prime Minister Mark Carney's private investment agenda likely won't materialize until late 2027.
- President Donald Trump's Section 338 tariffs will likely delay trade renegotiations, while the federal government may tighten immigration levels further, potentially stalling housing market recovery.
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12 Articles
12 Articles
Capital Economics released a report on Wednesday.
·Montreal, Canada
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Trade uncertainties and the slowdown in immigration are slowing down.
·Montreal, Canada
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Total News Sources12
Leaning Left6Leaning Right1Center3Last UpdatedBias Distribution60% Left
Bias Distribution
- 60% of the sources lean Left
60% Left
L 60%
C 30%
Factuality
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