Major Institutions Shift Ahead of the October 28 BoC Meeting: Rising Inflation Expectations and Diverging Forecasts

Published Thursday, October 22, 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.

Ahead of the Bank of Canada's (BoC) monetary policy decision on October 28, more voices among major financial institutions are factoring in the possibility of a policy rate hike. The September Consumer Price Index (CPI), released on October 19, was milder than expected, but surveys released the same day showed long-term inflation expectations rising, prompting institutions to revise their forecasts one after another. However, short-term bond yields and market consensus remain fluid, so we take an objective look at each institution's analysis.

Key Points

• Major institutions shift to calling an October hike: On October 19, BMO, RBC Dominion Securities and Desjardins Group shifted to forecasting a policy rate hike on October 28 (2.25% → 2.50%). Scotiabank also supports a hike, and Manulife predicts back-to-back hikes in October and December.
• September CPI and concerns about businesses passing on costs: September inflation (3.1%) came in below expectations, but in the central bank's Q3 surveys, consumers' long-term inflation expectations jumped to their highest level since the pandemic. In particular, about half of responding businesses said they plan to pass high oil prices and tariff costs on to consumer prices, heightening concerns about broadening inflation.
• The two sides of Middle East risk: BoC Governor Tiff Macklem noted that high oil prices from the Middle East conflict push up inflation, but at the same time boost exports, income and investment for Canada as an energy-exporting country.
• A finely balanced hold consensus and volatility: On October 19, the swap market's implied probability of a hike briefly soared as high as 87% intraday, but overheated bets have since cooled somewhat in short-term bond yields. Bloomberg's overall survey consensus also still points to an "October hold," making the outcome hard to predict.

What It Means

The major banks' forecast revisions show that the central bank is more wary of "inflation expectations" and "businesses' moves to pass on prices" than of the current inflation figures themselves. Survey results suggesting that the burden of tariffs and oil prices could pass through in earnest to consumer prices are raising tension in the market.

However, the overall market consensus still leaves the door open to a hold, and short-term bond yields are rising and falling day by day, so it is too early to treat an October hike as a done deal. Next week's meeting will be a close contest between two rationales: "pre-emptive inflation defence" and "a hold in light of slowing domestic demand." With even institutional forecasts diverging and volatility continuing, rather than rushing to bet on a particular outcome, we recommend calmly reviewing your financing plan with the trend in mind that high rates could last longer than expected.