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Next eventual BoC move is more likely a hike That outlook, combined with the overnight rate already at the lower bound of the neutral range, makes it challenging to make a case for additional easing from the BoC. Indeed, we think the next move from the central bank is more likely to be a hike, although the timing is uncertain. For now, we maintain our forecast that the BoC will hold the overnight rate steady at 2.25% throughout 2026 before raising it back up to the top of the 2.25% to 3.25% neutral range in 2027. Upside risks to our base case—stemming from stronger-than-expected consumer purchases or unwinding of trade headwinds due to a shifting U.S. political landscape—could add to growth and inflation, narrow the output gap faster than expected, and pull rate hikes forward into 2026.

The Bank of Canada delivered a well-telegraphed, widely-expected hold this week, keeping the overnight rate at 2.25%—the bottom of the neutral range and where we expect it will remain through the end of 2026.

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International trade 101—the Canadian edition Amid the constant churn of U.S. tariff headlines, fundamental questions about Canada’s trade often go unanswered. Questions such as: What exactly does Canada export—and where does it all go? Has Canada always been this dependent on the U.S. market? Which provinces are most at risk from trade disruptions? Should we worry less about tariffs on certain goods like fungible raw materials than others? In this episode on the 10-Minute Take, RBC Economics’ Claire Fan and Carrie Freestone dig into these questions and more. Listen to our newest episode here or wherever you get your podcasts: https://www.rbc.com/en/thought-leadership/economics/the-10-minute-take/

Monthly Housing Market Update Price corrections pause in Ontario, B.C. and Alberta Moderating new listings coincides with tentative reprieve from the persistent post-pandemic price corrections that marked 2024 and early 2025. In Ontario, including the Greater Toronto Area, the MLS Home Price Index edged higher in October, while B.C. saw its second consecutive month of stability. Similarly, Alberta saw prices pick up in October after six months of declines. We think it’s still too early to determine whether they represent a sustained inflection point, or a temporary pause in a broader downtrend.

Central banks cut as trade walls rise • We continue to expect slow growth in Canada. U.S. Section 232 tariffs are expanding, but most Canadian exports to the United States remain duty free under the CUSMA exemption. • Tracking the U.S. economy has become more difficult with the government shutdown curtailing data releases. Available data shows U.S. gross domestic product growth to be more resilient than we expected in Q3, but labour market data remains consistent with a gradual rise in the unemployment rate. • We look for the U.S. Federal Reserve to keep gradually reducing the fed funds target range (including a cut in October), but with 50 basis points fewer reductions in 2026 than previously expected. • For the Bank of Canada, we expect one more 25 bps interest rate cut this year while fiscal policy takes the lead in supporting sectors impacted by trade disruptions. • Issue in focus: U.S. duties on Canadian softwood lumber and kitchen cabinets will be in effect from Oct. 14, de minimis imports are suspended, and additional threats loom over pharmaceutical products and medium- and heavy-duty trucks. We examine the sector-by-sector impact of these new and pending U.S. tariffs.