The Bank of Canada faces an Oct. 28 rate decision as a Reuters poll leaned toward a hike, while Canadian data showed higher headline inflation and falling employment.
In Reuters’ Oct. 21-23 survey, an October increase was favored by 19 of the 34 economists polled, or 56%. Respondents expected a 25-basis-point rise that would take the overnight rate to 2.50%; the poll records economists’ expectations, not a Bank decision.
FXStreet reported Friday that Frances Donald and Nathan Janzen of Royal Bank of Canada considered an Oct. 28 increase possible, while December or January remained alternatives. FXStreet said the economists saw no immediate need to raise rates and judged that an October move would leave their medium-term view largely unchanged. EconoTimes previously covered RBC’s view that an earlier increase was a risk.
The Bank held its overnight-rate target at 2.25% on Sept. 2. It said economic slack remained while risks of higher inflation had increased.
Statistics Canada reported that consumer prices rose 3.1% year over year in September, compared with 3.0% in August. Gasoline prices were up 27.8% from a year earlier. The consumer price index excluding gasoline increased 2.2%, down from 2.4% in August. Employment fell by 68,000 in September, and the unemployment rate reached 6.5%.
The Bank’s third-quarter survey recorded a September increase in firms’ expectations for inflation over the coming year. It linked the shift to higher oil prices and the breakdown of Canada-U.S. trade talks. Around half of surveyed firms said they planned to have customers absorb at least part of cost increases tied to the war and tariffs.
The Bank is scheduled to announce its rate decision and publish its quarterly Monetary Policy Report at 9:45 a.m. ET Wednesday, Oct. 28. Statistics Canada’s next release, covering October CPI, is scheduled for Nov. 16.
