The Bank of Canada (BoC) is widely expected to keep interest rates steady at 2.25% today, as cautious policymakers weigh global uncertainty, USMCA renegotiation in 2026, and part-time paid job gains, leaving the Canadian dollar vulnerable to near-term weakness, notes Chris Turner, FX analyst at ING.
Caution prevails ahead of USMCA talks and part-time job gains
“The Bank of Canada meets today to set interest rates. The interest rate is unanimously expected to remain at 2.25%. The meeting comes at a time of tightening global repricing – largely led by Australia. In fact, financial markets now estimate a 30 basis point rate hike by October next year.”
“In its September Monetary Policy Report, the Bank of Canada took one of the gloomy views on the global economy. We believe the fact that Canada is subject to a renegotiation of the United States-Mexico-Canada Agreement in 2026 makes policymakers cautious – despite supportive government fiscal stimulus. In addition, much of Canada’s recent strong jobs numbers have been driven by part-time, rather than full-time, employment.”
“It therefore appears too early for the Bank of Canada to agree to a rate hike in 2026, and we see downside risks to the Canadian dollar today.”
