BMO on The Day Ahead in Canada

07:41 AM EDT, 03/18/2026 (MT Newswires) -- The Bank of Canada will release its policy statement at 9:45 a.m.ET on Wednesday, followed 45 minutes later by a press conference with Governor Macklem and Senior Deputy Governor Rogers, said Bank of Montreal (BMO).

The BoC is widely expected to hold rates steady at 2.25%, noted the bank. The outbreak of conflict in the Middle East prompted oil prices to surge, causing a major shift in the macro backdrop and creating greater uncertainty.

Even absent the conflict, Canada's central bank was likely to be on an extended pause, so little has changed for this meeting other than the context of the Governing Council's discussions. What has changed is the risk skew, as the BoC had been leaning ever so slightly to the dovish side, whereas an energy price boost to inflation likely puts any potential further easing on the shelf for now -- despite the latest benign inflation report and weak Labour Force Survey (LFS), stated BMO.

Meantime, inflation worries will need to intensify materially for the BoC to hike in this macro backdrop despite market pricing.

Canada will also get the population estimates for Q4 (as of Jan. 1, 2026) at 8:30 a.m. ET on Wednesday, pointed out the bank. The Q3 estimate was just 0.2% year over year, the slowest pace in 80 years of data, owing to restrictive immigration rules. At the same time on Wednesday, there is also the release of international securities transactions for January.

Later Wednesday, Quebec's budget will be tabled. The province was expecting a $9.9 billion deficit for FY25/26, or 1.5% of gross domestic product, and $7.8 billion, or 1.1% of GDP, for the upcoming FY26/27. A steadily weakening fiscal profile has been the norm during recent budget rounds. While BMO could see some measures rolled out ahead of the fall election, they will likely be limited. It looks for deficits to remain contained at less than 1.5% of GDP.

There will also be the Saskatchewan budget. At last check, the FY25/26 budget deficit was tracking at $427 million, or a "modest" 0.4% of GDP. The fiscal position will benefit from higher oil and potash prices, but this budget might have been locked in before the jump in resource prices.

The US dollar (USD) is slightly softer (BBDXY -0.06%), with the Canadian dollar (CAD or loonie) also softer amid a little lower WTI crude oil prices (CAD per USD +0.06%), added BMO.

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