Economists expect Bank of Canada to hold on Oct. 28

Economists expect the Bank of Canada to hold its key interest rate at 2.25 per cent when it announces its next decision on Oct. 28, even as markets keep a rate increase in view for December.

Updated Oct. 15, 2026, 9 a.m. MT. Developing: figures below come from Statistics Canada data as reported by Reuters and Canadian trade outlets.

The central bank publishes its decisions on the Bank of Canada website. The latest hard data is Statistics Canada’s Labour Force Survey, released in The Daily on Oct. 9, which showed the economy lost 68,300 jobs in September. Economists polled by Reuters had expected a gain of 9,200, and the unemployment rate rose to 6.5 per cent from 6.4 per cent.

The surprise cut the odds of an October hike. Markets priced about a 25 per cent chance of a quarter-point increase on Oct. 28 after the report, down from roughly 40 per cent before it, according to LSEG Data and Analytics data cited by Wealth Professional. TD Economics said markets still saw 27 per cent odds for October and 88 per cent for December.

Douglas Porter, chief economist at BMO Capital Markets, said a second month of sizable job losses “washes away the surprising strength” earlier in the year. He said the Bank’s appropriate stance is “watchful waiting.” Andrew Hencic of TD Economics also expects a hold in October.

Not every economist read the report as a sign of deep weakness. Claire Fan, a senior economist at RBC, said monthly employment counts are “notoriously volatile” and expects unemployment to edge lower through the end of 2026. Andrew Grantham of CIBC said the weakness appears to reflect data volatility more than new U.S. tariffs, and that CIBC expects rates to stay on hold at the Bank’s two remaining meetings this year.

The pressure on the Bank comes from prices, not jobs. Royce Mendes of Desjardins said rates will likely stay unchanged this month, but that higher energy prices could force tightening soon. Charles St-Arnaud, chief economist at Servus Credit Union in Edmonton, said he expects the Bank to stay patient for the rest of the year unless inflation broadens beyond fuel. Statistics Canada is scheduled to release the next consumer price index on Oct. 19, nine days before the decision.

Thomas Ryan of Capital Economics takes a firmer view. He said the Bank is on course to raise its rate to 2.75 per cent, the midpoint of what the bank considers its neutral range of 2.25 to 3.25 per cent, and then stop.

For readers aged 18 to 40, the breakdown of the job losses matters as much as the headline. Workers aged 15 to 24 accounted for about 70 per cent of the September decline, or roughly 48,000 positions, according to Canadian Mortgage Professional’s summary of the survey. Wealth Professional reported that manufacturing shed 13,000 jobs in the first full month after new U.S. tariffs on Canada took effect, while average hourly wages rose 2.3 per cent from a year earlier.

The Canadian dollar has also weakened. Reuters reported on Oct. 9 that the loonie traded at 1.4275 per U.S. dollar, or 70.05 U.S. cents, after touching its weakest intraday level since April 2025. A weaker currency makes imports costlier, which is one reason the Bank watches it alongside fuel and food prices.

Three things will shape the outcome before Oct. 28: the Oct. 19 inflation report, any further labour data, and whether energy prices keep climbing. A hold would leave borrowing costs where they are for now, but market pricing cited by Reuters and TD Economics shows December as the meeting where a hike remains a live possibility.

If you find reporting like this useful, consider supporting Canada News Media, an independent Canadian newsroom with no corporate parent.

Sourcing note: the 68,300 figure is from Reuters via Kitco (Oct. 9); other outlets round it to 68,000. The 2.25 per cent policy rate and the manufacturing and wage figures come from Wealth Professional alone. The Oct. 28 decision date and Oct. 19 inflation release come from the cited outlets, not the Bank’s own calendar.

Via Reuters (Kitco), Wealth Professional and Canadian Mortgage Professional. Originals: Kitco, Wealth Professional, Canadian Mortgage Professional.