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As you might have recently read, Scotiabank is calling for a rate hike in the back half of next year.
It's a spirited call, albeit a shot-in-the-dark one, given so many things could radically alter the BoC's path in 2026, including:
- Article 34.6 — which effectively lets the U.S. pull out of CUSMA
(an outside chance of a devastating blow to Canadian GDP) - The U.S. Supreme Court — which could rein in Trump's discretionary tariffs
(that could, ironically, raise the odds of #1 above) - AI investment, fiscal spending, near-zero population growth, and geopolitical risk — all of which present a scatterplot of possible rate outcomes.
At this point, it’s hard to treat any economist’s 12-month forecast as more than a rough sketch.
We're generally better off:
(A) leaning on the forward curve, where traders stake billions on future rate direction daily, and
(B) remembering one simple adage: Markets price efficiently. Lenders do not.
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