UBS, Manulife and Oxford join calls for Bank of Canada October rate hike

Growing numbers of forecasters are calling for the Bank of Canada to raise its overnight rate at the Oct. 28 interest-rate announcement, ending seven consecutive holds at 2.25 per cent as inflation risks firm.

Financial Post reporting said UBS Global Research now expects one 25-basis-point hike in October and another in January, taking the policy rate to 2.75 per cent — the midpoint of the Bank’s stated neutral range of 2.25 to 3.25 per cent. Economist Abigail Watt said Macklem’s post-September comments on rising inflation risks and businesses adapting to U.S.–Canada trade pressure suggested Ottawa is less willing to look through above-target headline inflation. Canada’s CPI accelerated to three per cent year over year in August; UBS forecasts 3.3 per cent when September figures land on Oct. 19. Manulife Financial and Oxford Economics Ltd. have also pulled forward October hike calls — Manulife citing Middle East conflict and second-round price risks in a Sept. 25 note covered by the Financial Post, while Oxford previously saw holds into autumn 2027. Bank of Nova Scotia is likewise calling for an October move.

Equity markets offered a short-term counterpoint Friday: Canada’s S&P/TSX composite rose 347.89 points to 35,502.65, snapping a string of declines as investors weighed a still-resilient economy against higher bond yields, according to Investment Executive / Canadian Press. Portfolio Management Corp.’s Anish Chopra said the week had been about tension between economic resilience and a tougher rate backdrop, with financials and rate-sensitive sectors pressured earlier. Statistics Canada’s September jobs report is due next Friday and is widely watched for the rate outlook. Not investment advice. Sources: Financial Post — UBS October hike call; Financial Post — Manulife; Investment Executive — TSX Friday rebound; Bank of Canada — Oct. 28 announcement.