National Bank of Canada forecasts the first Bank of Canada rate hike in Q1 2027, later than OIS pricing but ahead of Bloomberg’s median outlook.
National Bank of Canada analysts maintain their call for the Bank of Canada’s first rate hike in Q1 2027, citing accumulated economic slack and data lags despite strong labor and GDP figures. Inflation near 3% and above-target expectations could suggest earlier tightening, but delayed data releases complicate policy decisions this year or next.
The forecast aligns later than overnight index swap (OIS) market pricing but precedes Bloomberg’s median estimate, which expects no hike until H2 2027. Analysts argue that Q3 GDP data, not published until late November, will likely defer any policy shift until early 2027.
If the projection holds, short-term Government of Canada bonds may underperform U.S. Treasuries over the next year, according to the analysts.