TD Securities’ Robert Both expects the Bank of Canada to remain cautious even if a tariff agreement is reached. The Bank wants more data on how lower tariffs affect exports and output, with key trade figures not available until November. TD forecasts the BoC staying on hold through 2026 and delivering its first rate hike in January despite a narrowing output gap.

BoC seen patient despite easing trade risks

“We look for the Bank of Canada to proceed cautiously even if this deal is finalized by Saturday.”

“The Bank will want to see more data on the impact of lower tariffs, which won’t be available until November.”

“We continue to look for the Bank to stay on hold through 2026 before hiking in January.”

“The Bank of Canada has been heavily focused on trade tensions as a dovish risk to its outlook, stating as recently as June that “significant new trade restrictions on Canada” could force it to cut rates again.”

“Even if we can’t rule out further spillovers from high oil prices, the backdrop of excess supply should allow the Bank of Canada to stay patient and see how exports respond.”