The Bank of Canada prepares for a pivotal interest rate decision on Oct. 28, awaiting September inflation data and quarterly surveys. RBC economist Nathan Janzen expects inflation to hold steady around three per cent.
The Bank of Canada is preparing for a potentially pivotal interest rate decision scheduled for Oct. 28, 2026. Ahead of the meeting, the central bank will receive a series of critical economic data releases starting Monday, which will inform its policy direction.
Statistics Canada is set to release its September inflation data on Monday. This report will provide the central bank with insight into how energy price pressures are affecting other components of the consumer basket.
Nathan Janzen, assistant chief economist at RBC, stated that he expects the annual rate of inflation to have held steady around three per cent last month. Janzen attributed this stability primarily to persistently high gasoline prices.
Janzen described the upcoming Bank of Canada decision as a “live” meeting, indicating that the door is open for the central bank to raise its policy rate. However, he noted that a rate hike is not his base case scenario.
According to Janzen, even if the September price data indicates that inflationary pressures are spreading beyond the gas pumps, the central bank will weigh this against signs of softness in the labour market and the wider economy.
In addition to the inflation data, the Bank of Canada will release its own quarterly surveys of businesses and consumers on Monday. These surveys are intended to give the bank a better sense of whether firms are planning to pass their own rising costs on to consumers.
Janzen explained the complex dynamic facing the central bank: “Higher energy prices — all else equal — would mean broader inflation pressures would be expected to rise in the future. But if the economy is getting weaker, then there are some offsetting disinflationary forces there as well.”
He added that this situation “puts (the Bank of Canada) still in a wait-and-see mode — very, very data dependent.”
The Bank of Canada’s decision on Oct. 28 will signal its stance on balancing inflation control against economic growth. The release of September inflation data and quarterly surveys provides the immediate evidence the central bank needs to determine if current monetary policy is sufficient or if adjustments are required to manage energy-driven price pressures amidst a softening labour market.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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