08/26/2026
Sentiment on the Bank of Canada's rate path just shifted and it's worth understanding why.
Just a few weeks ago, markets were pricing in a real chance of a rate hike later this year, driven by oil price pressure tied to the Iran conflict. This week's escalation in the US-Canada trade war; Ottawa's new retaliatory tariffs on $27B+ of US goods has changed that calculus.
Bank economists at BMO, TD, CIBC and Servus Credit Union now see hike odds falling sharply, with one economist suggesting a hike is unlikely before spring 2027 at the earliest. BMO's own analysis notes the medium-term risk has tilted "slightly more dovish," with the Bank of Canada itself flagging worsening tariffs as a potential reason to cut further down the line.
None of this changes what's expected next Wednesday, September 2: another hold at 2.25%, the base case across the board. But the direction of travel in the conversation has moved from "will they hike" to "the next move, if any, is more likely down."
For clients and prospective buyers, this reinforces something I've been saying all year: predictability itself has value. A steady rate environment gives you room to plan with confidence, rather than racing a moving target.
Curious how this shift in outlook affects your specific mortgage strategy...whether you're variable, coming up on renewal, or house hunting? Let's talk it through.
