Bank of Canada Unlikely to Begin Sustained Rate Hike Cycle Amid Economic Weakness: Rosenberg Research

10:59 AM EST, 11/02/2026 (MT Newswires) -- Last week's Bank of Canada's 25 basis points rate hike, its first in more than three years, may not mark the start of a sustained tightening cycle, according to Rosenberg Research in a Monday note. A weakening economy and easing inflation will leave little justification for further aggressive tightening despite financial markets pricing in another 100bps of rate hikes by next September, wrote Rosenberg Research in the note. Core inflation is already below 2%, while employment is falling, wage growth has slowed to 2.3%, and the housing market remains fragile. With excess capacity persisting and August gross domestic product unexpectedly contracting 0.1% on the month, economic conditions point to a weaker outlook, said Rosenberg. While Canada's central bank remains wary of energy costs fuelling underlying inflation, spillover effects have yet to materialize. Further rate hikes in response to a supply shock risk worsening economic weakness, it added. As such, Rosenberg said it expects just one, or at most two, further rate hikes before the BoC pauses. The key, though unlikely, risk is that higher energy prices eventually push up core inflation and wages.