Canada’s interest-rate outlook now includes two sharply different bank calls: FXStreet reported that Standard Chartered expects no change at 2.25% through 2027, while Scotiabank’s published forecast points higher.
The Oct. 20 FXStreet report attributed the hold forecast to Standard Chartered economist Dan Pan. Pan said an October increase would be “justified by caution, not necessity,” according to the outlet. FXStreet linked his view to subdued domestic demand and limited pressure in underlying prices.
Scotiabank’s Oct. 13 outlook projected a 3.25% policy rate in the second quarter of 2027. The bank cited the risk that sustained energy costs spread into a broader range of prices. The contrast follows an earlier forecast from Royal Bank of Canada economist Abbey Xu, who expected a hold through 2026; EconoTimes previously covered Xu’s rate outlook.
Statistics Canada reported that consumer prices rose 3.1% year over year in September, up from 3% in August. Gasoline prices climbed 27.8%, while inflation excluding gasoline was 2.2%. The Bank of Canada’s three preferred core measures all eased: CPI-trim fell to 1.8% from 1.9%, CPI-median to 1.9% from 2%, and CPI-common to 2.4% from 2.6%.
Employment declined by 68,000, or 0.3%, in September, and unemployment rose to 6.5%. Statistics Canada put labor-force participation at 64.8%, its lowest level since December 1997, excluding 2020.
The Bank of Canada’s third-quarter business survey found that most companies expected to keep staffing steady, while a majority reported spare capacity. About three-quarters of interviews took place before Canada-U.S. trade talks broke down; Canada announced new counter-tariffs afterward. The Bank said higher commodity prices supported investment plans at some exporters, while trade uncertainty restrained other firms. Some businesses facing unusually large cost increases planned to pass part of them on to customers.
The Bank held its overnight-rate target at 2.25% on Sept. 2. Its deliberations described the economy as remaining in excess supply and noted little evidence then that higher gasoline prices had spread broadly to other prices. The Bank linked energy pressure to the Middle East conflict and refinery conditions, and said broader price effects could require a policy response. Its next rate decision and Monetary Policy Report are scheduled for Oct. 28 at 9:45 a.m. ET.
