After a year of rate holds, markets see BoC’s next meeting as a coin flip

After a year of rate holds, markets see BoC’s next meeting as a coin flip CRAIG LORD OTTAWA THE CANADIAN PRESS PUBLISHED YESTERDAY Open this photo in gallery: BoC Governor Tiff Macklem speaks during the unveiling of a new $20 note in Ottawa this month. The central bank has held its policy rate steady for nearly a year, but traders increasingly believe it may hike in October. JUSTIN TANG/THE CANADIAN PRESS COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. Traders are increasingly betting that the Bank of Canada could end its string of interest rate holds and deliver a hike as early as next month. While many economists remain unconvinced that the central bank will raise the cost of borrowing this year, concerns that inflation could become a more persistent thorn than first thought have some pencilling in a tightening cycle to start in early 2027. The U.S. Federal Reserve broke its own stand-pat stance and delivered the United States’ first rate hike in more than three years on Wednesday in an effort to rein in inflationary pressures bubbling up south of the border. The Bank of Canada has sat comfortably on the sidelines for nearly a year now, content to leave its policy rate unchanged at 2.25 per cent as it waits to see how the economy and inflation will adjust to a series of shocks. In the days leading up to each of the Bank of Canada’s six meetings so far in 2026, financial market odds have overwhelmingly been in favour of rate holds. Before the central bank’s Sept. 2 decision to leave the policy rate unchanged, odds of a hold were pegged at 94 per cent, according to LSEG Data & Analytics. The Bank of Canada held its benchmark interest rate steady again as new U.S. tariffs and the ongoing war in Iran cloud the central bank's outlook. THE CANADIAN PRESS Opinion: With the trade war, the Bank of Canada had no choice but to hold rates With over a month to go until the Bank of Canada’s next decision on Oct. 28, markets now see that meeting as a coin flip. Odds have fluctuated sharply over the past few weeks, but stood narrowly in favour of a hike as of Thursday afternoon. Claire Fan, senior economist at RBC, said bond market pricing can be viewed as something of a consensus expectation for central bank decisions and also as a barometer for how market participants are viewing fresh economic data. Odds had already been titled in favour of a Fed hike but soared…