CIBC Pushes Back on October Rate Hike Talk: Trade Risk Gives the BoC Room to Hold

Published Thursday, September 24, 2026 · Rates, market figures and outlooks in this article reflect its publication date and may differ today. Ask us for the latest picture. Translated from the Korean original.

Following the Fed's rate hike and the oil price shock, the dominant view in financial markets is that the Bank of Canada (BoC) will raise its policy rate as soon as next month (October 28). However, CIBC, one of Canada's Big Five banks, has recently pushed back against these early-hike bets, offering the opposite analysis: because of the risk of economic contraction from the Canada–U.S. tariff dispute, the central bank has ample room to hold its policy rate at 2.25% through 2027.

Key Points

• Market bets on an October hike vs. a diverging forecast: Financial markets see a high probability of a BoC hike at the October meeting, but Avery Shenfeld, Chief Economist at CIBC Capital Markets, believes the central bank has plenty of room to hold rates through 2027.
• Canada's economic conditions differ from the U.S.: Unlike the U.S., which raised rates by surprise, Canada's core inflation measures are still near the central bank's 2% target, and economy-wide excess capacity is putting downward pressure on underlying prices.
• Real-economy damage from the tariff dispute (Growth Drag): If the tariff measures on the U.S. that took effect in August continue, they are projected to shave about 0.5 percentage points off Canada's economic growth over the next year, and to weigh even more heavily on the job market and business investment.
• The BoC's case for wait-and-see: The central bank will keep sending hawkish signals that it is ready to tighten if inflation broadens, but in practice it has ample justification to delay policy decisions until the ripple effects of the energy price surge and the tariff shock become clear.

What It Means

CIBC's report offers an important counterargument to the "forced October hike" fear that has recently rattled the market. It is true that rising oil prices and a weaker currency are pushing up inflation, but the export hit and cooling job market caused by the tariff bombshell are, conversely, strong forces holding inflation down. In the end, the fragility of Canada's real economy itself is acting as a strong shield that keeps the central bank from rushing to press the tightening button.

However, this analysis by no means implies an immediate rate cut. CIBC's forecast is not that rates will come down, but that the current 2.25% rate can be held for an extended period, and the central bank's official position remains hawkish, ready to respond immediately if inflation spreads. On top of that, due to supply-and-demand instability in the U.S. bond market, 5-year fixed mortgage rates remain firmly resistant to falling.

So borrowers don't need to be overly shaken by the market's extreme fear of hikes, but should also be wary of premature hopes that rates will fall quickly again as they did in the past. Financial markets may keep swinging with each economic release until the next policy rate decision on October 28, so if you have a renewal or a new mortgage coming up, we recommend blocking upside risk with a rate hold and keeping a conservative financing plan.