Scotiabank Economics expects the Bank of Canada to raise its policy rate by 25 basis points on Oct. 28, as energy-driven inflation risks grow despite softer core inflation readings and weaker employment. Global News reported that economists at Desjardins and BMO Capital Markets also favor a hike, while Reuters reported that Governor Tiff Macklem said the Bank expects to raise its inflation forecast.
Scotiabank’s call differs from its Sept. 9 outlook, which listed an October increase as possible but not its base case. Derek Holt, the bank’s vice president and head of Capital Markets Economics, wrote in the Oct. 19 note, “We forecast the Bank of Canada will hike 25bps next week.” Scotiabank said its Oct. 20 market snapshot implied 22 basis points of a possible 25-basis-point increase ahead of the Bank’s Oct. 28 decision.
