Scotiabank Expects BoC to Begin Rate-Hike Cycle Late This Year

08:17 AM EDT, 06/22/2026 (MT Newswires) -- Scotiabank Economics said it continues to expect the Bank of Canada (BoC) to begin a tightening cycle toward the end of the year, with additional rate increases likely in early 2027.

In a note on Friday, the bank said its base-case forecast calls for a cumulative 75 basis points of rate hikes over the fourth quarter of 2026 and the first quarter of 2027.

Scotiabank noted that it has held this view since November, before the outbreak of the Iran conflict and the resulting surge in commodity prices.

"That's an important first point in that the decline in commodity prices of late does not change our view that the [Canadian] economy would gradually re-emerge from an underlying soft patch on core inflation," wrote the bank in the note.

Scotiabank said it is already seeing signs of underlying inflation pressures, noting that the average of the BoC's trimmed-mean and weighted-median core inflation measures has exceeded 2% on a month-over-month seasonally adjusted annualized basis over the last two months.

The bank also said it remains skeptical that a memorandum of understanding between the United States and Iran to seek an end to their conflict will succeed, which could keep commodity prices higher than before the war between the two countries started.

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