TD Securities Sees No Rate Hikes Until 2027, Expects Neutral Levels After

The Bank of Canada is expected to keep interest rates steady at 2.25% through 2026, according to TD Securities.

This prediction comes despite headline inflation being near the top of its target range of 1-3%. The bank believes excess supply will be gradually absorbed and oil-driven inflation shocks will be assessed, leading to a return to neutral rates in 2027 via two 25bp hikes.

TD Securities projects that these rate hikes will occur in January and March 2027, bringing the interest rate back up to 2.75%.