No surprises expected from the BOC today but what are analysts saying about the next move?
2026-01-28 09:29:00
Every major institution in Canada is expecting the BOC to be on hold today and that is no surprise. Market pricing is for the central bank to stay on hold with a ~92% probability and pretty much no clear cut rate moves whatsoever all through this year. Most analysts are sharing that view but how is the balance of risks shaping up for the BOC looking further out?
Let’s dive straight into what the big analysts from Canada have to say.
TD Securities
– BOC to stay on hold through 2026, rate hikes to come in 2027
– “The first BOC hike is fully priced for Q1 2027, which is in line with our forecast – but we believe that pricing hikes for 1H 2026 would require either several more months of positive economic data or overt hawkish signals from the BOC. Neither seem likely.”
Scotiabank
– BOC to hike rates by 50 bps in Q4 2026, further 25 bps rate hike in Q1 2027
– “The BOC is unlikely to move until USMCA renegotiations are settled and the policy backdrop clears…the next move will be a rate hike in the second half of 2026, bringing the policy rate closer to its neutral stance. By that time, we anticipate the economy will be on firmer footing which will allow the BOC to start to withdraw some stimulus.”
BMO
– BOC to stay on hold through 2026
– “Macklem looks to retain his neutral bias, potentially with a slight dovish tilt, amid slowing core inflation and persistent uncertainty. The growth and inflation projections will likely have a cautious lean as USMCA renegotiations loom large. Until the outlook changes materially, it’s steady as she goes for monetary policy.”
RBC
– BOC to stay on hold through 2026, then 100 bps of rate hikes seen in 2027
– “The focus will be on the monetary policy report and a new set of central projections. We don’t anticipate material revisions, and expect forecasts will continue to align well with our cautiously optimistic view for a gradual recovery in 2026.”
But that’s not just it, some analysts are still anticipating that rate cuts could still be in the picture too.
BofA
– “Expect guidance and forecasts will mostly remain unchanged, with the BoOC continuing to signal that it intends to remain on hold at upcoming meetings…While we don’t rule out the possibility that the BOC could normalize policy back towards the middle of its 2.25% to 3.25% neutral rate range later in the year, we also see (smaller) risks that a renewed downturn in labor market and/or growth data could prompt one or two more cuts to bring the policy rate more squarely into accommodative territory.”
Wells Fargo
– “We would not be surprised to to at least hear overtures toward the possibility of restarting rate cuts. Financial markets are not priced for much in terms of policy rate adjustments in Canada this year, so if a slight reference to cuts comes up, rates markets could adjust quickly while the Canadian dollar could be restrained.”
Despite acknowledging rate cut risks, both BofA and Wells Fargo have their base case scenarios set at not expecting any changes to the bank rate in 2026.
