TD Securities strategists expect the Bank of Canada (BoC) to hold its policy rate at 2.25% through 2026 before returning to a 2.75% neutral level in 2027 via 25 bp hikes in January and March. They see higher Oil prices from US–Iran tensions as an inflation shock but argue well-anchored expectations and muted core inflation allow the Bank to look through stronger headline Consumer Price Index (CPI).

BoC seen on extended hold then hiking

“We look for the Bank of Canada to stay on hold