Canada’s major bank economists see the Bank of Canada staying sidelined, with cuts more likely than hikes next
Canada’s big bank economists were unified in expecting the Bank of Canada’s latest rate hold. Their reaction now centres on what comes next with the overwhelming message that policy is likely to remain stuck in place for a long stretch, with risks tilting slightly toward eventual easing rather than tightening.
Scotiabank’s head of Capital Markets Economics, Derek Holt described the decision as delivering no meaningful shift in direction, pointing to the Bank’s continued reluctance to signal its next move. He said policymakers showed “ambivalence toward the direction and timing of a rate move,” adding that markets largely shrugged off the announcement because it did little to change expectations. Scotia’s baseline outlook still assumes rates remain unchanged through at least mid-2026, though Holt continues to pencil in potential late-year hikes if economic data firm materially.
At RBC, economist Claire Fan echoed the view that the decision contained few surprises. She noted the Bank continues to judge the current rate as appropriate within its neutral range, with growth subdued and inflation close to target. RBC’s forecast assumes the policy rate stays on hold through the end of 2026, citing persistent trade uncertainty and insufficient economic momentum to justify either cuts or hikes in the near term.
TD Economics’ Andrew Hencic focused on the Bank’s emphasis on elevated uncertainty. He highlighted that the BoC acknowledged its outlook “has not changed significantly” since its last full forecast update, reinforcing a data-dependent approach rather than a pre-set policy path. TD expects the Bank to remain cautious and reactive, waiting for clearer signals from inflation and growth before adjusting rates.
CIBC Capital Markets economists Ali Jaffery and Avery Shenfeld interpreted the decision as neutral but subtly dovish. They argue the Bank appears more comfortable that underlying inflation pressures are easing than worried about upside risks. Their team expects no policy moves this year but believes the probability of a rate cut is higher than that of a hike should growth disappoint amid lingering trade risks.
BMO’s Doug Porter similarly characterized the central bank as effectively in waiting mode, signalling readiness to respond if conditions shift, but no urgency to act. He said: “On balance, there is little to move the needle here for markets. The Bank remains cautious amid heightened uncertainty. Unless and until there is a resolution on USMCA negotiations or the economic data break either way, it's clear the Bank has little appetite to move.”
