RBC Sees Bank on Hold This Year But USMCA Trade Review May Add Risks

06:56 AM EST, 01/29/2026 (MT Newswires) -- The Bank of Canada delivered a neutral hold in its first decision of 2026, as was broadly expected going in Wednesday's policy meeting, said RBC.

There was nothing particularly compelling from Wednesday's meeting to warrant a change in probability assessments for the BoC going forward, noted the bank.

RBC's view is that the BoC is firmly on hold and an accumulation of evidence will be required to move it off its spot. A policy move over the next six-months seems highly improbable.

The bank's base case is the BoC on hold this year, hikes starting in 2027 and a low chance of cuts that are outweighed by hikes being brought forward into H2.

Nonetheless, with heightened noise around the USMCA trade deal review this year, the risk skew favors cut pricing deepening out to the July meeting instead of hike pricing developing during this period, added RBC.

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