RBC Previews This Week's Bank of Canada Policy Meeting

09:49 AM EDT, 04/27/2026 (MT Newswires) -- Focus this week will be on the Bank of Canada's decision on interest rates Wednesday amid rising consumer prices, and then on February's gross domestic product print on Thursday, said RBC in its Forward Guidance note published last Friday.

RBC expects the BoC to hold interest rates unchanged for a fourth consecutive meeting, but said policymakers will be watching the impact of higher energy prices on inflation closely. Headline consumer price index growth looks likely to rise above the 1% to 3% inflation target range in April for the first time since December 2023, it added.

But there is nothing the BoC's interest rate policy can do to influence the global price of oil, and lags in the impact of interest rates on the economy mean the central bank needs to set monetary policy based on where inflation will be in the future, not just where it is today, RBC noted.

RBC estimates the BoC will be cautious about adding to near-term affordability challenges created by a supply-driven surge in fuel costs as long as inflation expectations and broader inflation pressures, outside of energy price increases, remain contained.

Inflation expectations did edge higher in the BoC's Business Outlook Survey (BOC) last week, but further signs of easing in "core" measures in March should leave the central bank flexibility to focus on incoming data against its recent projections, according to RBC.

Q1 GDP growth is tracking "broadly in line" with the BoC's January forecast, with recent data pointing to a modest pickup in momentum following a softer start to the year. Labor market conditions have also shown signs of stabilization, but with the unemployment rate still at levels that wouldn't imply underlying inflation pressures building, RBC said.

This combination suggests limited urgency for further policy adjustment in the near term, it added, noting the bank's base case forecast assumes rates remain on hold through 2026 with gradual increases beginning in 2027 as the economy continues to normalize.

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