Bank of Canada Set to Tighten as Markets Weigh the Pace and Scale of Rate Hikes, National Bank Says

12:38 PM EDT, 10/14/2026 (MT Newswires) -- The Bank of Canada is expected to resume raising interest rates, but the timing and extent of the next tightening cycle remain unclear, according to National Bank of Canada Capital Markets in a Wednesday note. Financial markets now expect the first increase this December rather than at the Oct. 28 policy meeting, while forecasters are divided between a move later this year and a delay until 2027 or beyond, wrote National Bank. Expectations for the peak rate also differ, with markets anticipating a move into restrictive territory, while most economists foresee a more modest increase, the bank said. Previous tightening cycles offer useful context, but each has reflected different economic conditions, added National Bank. The upcoming cycle will be shaped by an oil supply shock, softer demand and trade pressures, while interest rates are already near neutral. Historically, the BoC has not always raised rates to restrictive levels, and when it has, rates have generally remained at their peak for less than a year, said the bank. A common feature of past tightening cycles is that the BoC often starts with consecutive rate hikes, though a similar sequence isn't guaranteed this time, according to National Bank.