Scotiabank Predicts Canadian Central Bank to Maintain Rates Amid Trade Agreement Uncertainty

Scotiabank anticipates that the Bank of Canada will keep interest rates steady until the outcome of the USMCA negotiations becomes clearer. According to Jin10, the bank currently assumes that the North American Free Trade Agreement will be renewed with moderate adjustments. However, it acknowledges that uncertainties surrounding the agreement and other geopolitical and financial risks closely tied to U.S. policies pose significant risks to its outlook. At present, the bank expects inflationary pressures to keep the core inflation rate in the upper half of the central bank's 1%-3% target range. The bank forecasts that the policy rate will reach 3% by early 2027.