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Bank of Canada seen staying cautious even with tariff deal in play

TD Securities expects the Bank of Canada to keep policy on hold through 2026, with the first rate hike projected for January.

Reported · Written up by our desk · Central Banks

TD Securities expects the Bank of Canada to remain cautious even if a tariff agreement is reached, arguing the central bank needs more data on how lower tariffs will affect exports and overall output.

The note says key trade figures are not expected until November, which would keep the Bank of Canada from changing course before it can better assess the impact on the Canadian economy.

TD Securities projects the Bank of Canada will stay on hold through 2026 and then deliver its first rate hike in January, even as it sees a narrowing output gap.

The expectation comes as market participants weigh shifting macro signals, according to FXStreet’s summary of TD Securities’ outlook.

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