The Bank of Canada is expected to maintain its overnight target at 2.25%, a decision anticipated by forecasters and OIS markets. Recent economic data has tempered rate cut expectations, leading to a slight easing bias in the near term and a mild hiking bias later in 2026. The statement is likely to balance signs of improvement in the labor market with ongoing concerns about hiring intentions, Taylor Schleich & Ethan Currie from National Bank of Canada (NBC) notes.

Expectations for steady rates

"The Bank of Canada is set to leave its overnight target unchanged at 2.25%, a decision widely expected by forecasters and OIS markets."

"We expect the BoC’s output gap estimate to narrow (to -1% to 0% of GDP) but there’s a risk it’s left unchanged."

"The direction of monetary policy an ongoing debate: Even after the BoC’s move to the sidelines in October, markets continued to view further easing as a distinct possibility."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)