Canada Rate Hikes Loom as Inflation Pressures Build Amid Middle East Conflict

The Bank of Canada is expected to raise interest rates at its next two meetings as inflation pressures build, according to Dominique Lapointe, a senior macro strategist at Manulife. This change in view comes after the Middle East conflict created the risk of broader price pressures.

Lapointe previously held that the central bank would remain on hold through the end of this year and had predicted rate hikes to begin in mid-2027 as its base case. However, 'inflation dynamics are changing', Lapointe wrote in a report to investors.