UBS Now Sees Bank of Canada Rate Hike at October Policy Meeting, Another in January 2027

10:27 AM EDT, 09/30/2026 (MT Newswires) -- UBS Global Research said it now expects the Bank of Canada to raise its policy rate by 25 basis points in October and again in January 2027, from a previous estimate for the BoC to stand pat this year. This reflects a shift in the BoC's assessment of inflation risks rather than a material change in the bank's economic outlook, said UBS in a note dated Tuesday but made available to media on Wednesday. "We have long expected the Bank's next move to be a hike, but we previously thought policymakers would need clearer evidence of domestic-demand-driven inflation before acting," wrote UBS economists, including Abigail Watt, in the note. Since September, however, the BoC has emphasized rising inflation risks from the Middle East while sounding less concerned about trade-related downside risks. Its references to businesses adapting and "getting on with it" suggest it may be less willing to look through above-target headline inflation, added the bank. Governor Tiff Macklem's latest remarks suggest Canada's central bank may be considering an earlier rate hike, according to UBS. The BoC is slated to hold its next policy meeting on Oct. 28.