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Bank of Canada seen delaying rate hikes to 2027

National Bank of Canada analysts expect short-term Government of Canada bonds to lag U.S. Treasuries over the next year, citing accumulated slack and data lags.

Reported · Written up by our desk · Central Banks

National Bank of Canada analysts Taylor Schleich and Ethan Currie reiterated their view that the Bank of Canada will follow a gradual tightening path that does not begin until early 2027, despite stronger Canadian labor data and solid Q2 GDP. Their argument is that accumulated slack and timing lags in the data should keep tightening on hold longer than markets currently imply.

They continue to see the first BoC rate hike in Q1 2027, positioning it later than OIS pricing but earlier than Bloomberg’s median forecast. The note also links the delayed tightening call to expected relative performance in fixed income markets, with the analysts saying short term GoC bonds could underperform U.S. Treasuries over the next year.

FXStreet also highlighted broader FX context, noting GBP/USD slipped below 1.3500 on modest U.S. dollar strength and mixed UK macro data, while EUR/USD held within its daily range above 1.1500 amid a risk-averse backdrop tied to persistent Middle East uncertainty. In its market wrap, it said the U.S. dollar stabilized as September Fed hike bets were subdued and volatility remained low with thin liquidity.

In crypto markets, the same wrap described Bitcoin struggling to reclaim the $64,000 level, while Ethereum attempted to build momentum near $1,900 resistance and Ripple held support above $1.00, though upward movement remained limited.

Latest closeBitcoin $63,763.02 ▲0.6%|Ethereum $1,889.51 ▲0.6%|EUR/USD 1.153 ▼0.2%

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