Manulife Sees Two Rate Hikes Coming from Bank of Canada This Autumn

Manulife Financial has revised its forecast for interest rates in Canada, now predicting two consecutive overnight rate increases by the Bank of Canada this autumn. According to a report by Dominique Lapointe, macro strategist at Manulife Financial, inflation dynamics are changing, with core inflation measures growing close to 3% month-over-month annualized for two consecutive months.

The catalyst behind this shift in forecast is the prolonged conflict in the Middle East, which raises the probability that second-round price effects will filter through to core goods. The Bank of Canada has held its overnight rate at 2.25% since October 2025 and Manulife's target window for the first tightening cycle in nearly three years is now the October 28 and December 9 decisions.

The case against further patience was made by Lapointe, who argued that monetary policy cannot target specific industries and that the Governing Council will likely conclude that trade tensions do not offset inflation risks in the near term. This view aligns with other major financial institutions such as Scotiabank and National Bank, which project the overnight rate reaching 2.75% before December.