Bank of Canada rates could rise again in December, TD Securities strategists said on October 28, 2026, after the central bank raised its overnight rate to 2.5%.

Bank of Canada rates and TD’s forecast

TD Securities moved its forecast for the next rate increase to December from January, citing a low threshold for further adjustments after an extended pause. It expects the hiking cycle to end at 2.75%, one quarter of a percentage point above the current rate.

The strategists cautioned that a December increase is not guaranteed. They also pointed to risks to economic growth and the labor market.

Inflation risks behind the October decision

The central bank raised its overnight rate by 25 basis points on October 28, its first increase in more than three years. In its October policy decision, the Bank of Canada said further increases could be needed, but policymakers agreed to proceed carefully given the uncertainties.

The bank said it raised the rate to reduce the risk that persistently high energy prices spread more broadly to other goods and services. Inflation excluding gasoline was 2.2% in September, while measures of core inflation remained close to 2%.

The bank expects overall consumer price inflation to average 3% in 2027 before falling to 2% in the middle of 2028. It projected Canadian economic growth of 1% in 2026 and 2% in both 2027 and 2028, while noting considerable uncertainty around Canada-US trade relations.

Next milestone

The Bank of Canada’s next scheduled overnight-rate announcement is December 9, 2026.

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