Bank of Canada poised to hike key rate for first time in three years
TLT•Nineteen of 34 economists expect the Bank of Canada to raise its benchmark rate by 25 basis points to 2.5% on Wednesday. The bank is also expected to substantially revise its inflation forecast after annual inflation reached 3.1% in September.
1. Rate decision expected
The Bank of Canada is widely expected to raise its benchmark interest rate by 25 basis points to 2.5% on Wednesday, its first increase since July 2023. Nineteen of 34 economists surveyed from October 21 to 23 expected the move, and a majority forecast one more increase before March. Money markets were pricing in a roughly 77% chance of a hike.
2. Inflation outlook
Annual inflation rose to 3.1% in September, driven almost entirely by energy, while core measures eased below 2%, the midpoint of the bank’s 1% to 3% target. The bank is expected to sharply revise its inflation forecast for the coming year in its quarterly Monetary Policy Report; its July report projected inflation of 2.5% this year and 2% next year. The bank’s decision and report are scheduled for Wednesday at 9:45 a.m. ET.
