Downside Risks for Canadian Dollar As It's Too Early for Bank of Canada to Sanction Rate Hikes, Says ING

06:34 AM EST, 12/10/2025 (MT Newswires) -- The Bank of Canada meets on Wednesday to set interest rates, and the policy statement is scheduled to be released at 9:45 a.m. ET, said ING.

The policy rate is unanimously expected to be left at 2.25%, wrote the bank in a note.

The meeting comes at a time of hawkish global re-pricing -- led largely by Australia, stated ING. In fact, money markets now price in 30bps of BoC hikes by October 2026.

In its September monetary policy report, the BoC took one of the dimmer views of the global economy. ING thinks the fact that Canada is subject to a USMCA trade renegotiation in 2026 leaves policymakers cautious -- even though there is supportive government fiscal stimulus.

Additionally, a lot of the strong recent job numbers in Canada have been driven by part-time, not full-time employment, pointed out the bank.

As a consequence. it looks too early for the BoC to sanction 2026 rate hikes and ING sees downside risks to the Canadian dollar (CAD or loonie) on Wednesday.

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