The Bank of Canada is expected to raise interest rates at its Oct. 28 policy meeting, increasing borrowing costs for Canadians as the country grapples with stubborn inflation.
Futures markets are now placing the odds of a 25-basis point interest rate hike from the Bank of Canada in coming days at 78%.
The Bank of Canada has previously elected to hold its trendsetting overnight interest rate at 2.25% for seven consecutive meetings.
A majority of economists surveyed by Reuters (TRI) also expect Canada’s central bank to lift interest rates by a quarter point as rising energy prices exert upward pressure on inflation.
In recent days, Statistics Canada reported inflation in Canada rose an annualized 3.1% in September as the war in Iran continues to drive up gas prices at the pumps.
Also recently, Statistics Canada said that the economy lost 68,000 jobs in September, erasing all the gains seen earlier this year.
Bank of Canada Governor Tiff Macklem said at an International Monetary Fund (IMF) meeting last week that high global energy prices will drive up the inflation outlook within Canada.
Market observers say that if the Bank of Canada holds interest rates steady on Oct. 28, the central bank will almost certainly have to raise rates at its final meeting of the year on Dec. 9.
The Bank of Canada will also deliver its Monetary Policy Report on Oct. 28, which is the central bank’s updated outlook for the economy heading into 2027.
