Rabobank Predicts Bank of Canada to Hold Rates Steady Through 2027

Rabobank strategists predict that the Bank of Canada will keep its overnight rate at 2.25% in September and throughout 2027, despite market expectations of a 17bp hike by year-end.

The strategists point to strong Q2 GDP growth driven by exports as well as escalating US-Canada trade tensions, which could drag on Canadian GDP by 0.3-0.4 percentage points through the end of next year if tariffs remain at current levels.

Rabobank argues that monetary policy is already at its terminal rate, and the Bank has emphasized its commitment to preventing inflation from spreading throughout the economy.