Markets Push Bank of Canada’s First Rate Hike to March 2027 as Inflation Seen at 2.6%
Updated
Updated · The Wall Street Journal · May 11
Markets Push Bank of Canada’s First Rate Hike to March 2027 as Inflation Seen at 2.6%
2 articles · Updated · The Wall Street Journal · May 11
A Bank of Canada survey of 28 market participants showed the first expected rate increase has shifted to March 2027, later than many inflation-risk warnings tied to the Middle East conflict might suggest.
The same survey put median 2026 inflation at 2.6%, while March CPI was 2.4% and the central bank expects April inflation to peak near 3%—still within its 1% to 3% target band.
The Bank held its benchmark rate at 2.25% last month, though Governor Tiff Macklem said prolonged high energy prices could still force hikes if fuel costs start feeding into broader prices.
Overnight-index swaps imply at least two quarter-point increases before end-2026, but some economists say a weak April jobs report points instead to softer labor conditions and rising economic slack.
April CPI data due May 19 will be the next key test of whether inflation pressure is broadening enough to challenge the market view that rates stay unchanged until next year.
With peer nations hiking rates, is Canada's central bank falling behind on fighting global inflation?
Is Canada's historic population drop, not weak demand, the real reason its economy is stalling?