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TD Securities expects Bank of Canada to keep rates at 2.25% through 2026

The firm projects two 25 bp hikes in 2027 to bring the policy rate back to neutral at 2.75%, with oil driven inflation shocks shaping outlooks for Canadian Dollar and rates markets.

Reported · Written up by our desk · Central Banks

TD Securities expects the Bank of Canada to keep the Overnight Rate at 2.25% through 2026, even as headline CPI remains near the top of the central bank's target range, according to FXStreet.

The bank forecasts a return to neutral at 2.75% in 2027, using two 25 bp increases as excess supply is absorbed and as it assesses oil driven inflation shocks.

FXStreet notes that those expectations could influence how investors position for Canadian Dollar and Canadian rates, given the role of oil linked inflation in the policy outlook.

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