Canadian Bond Yields Steady as Markets Assess BoC Rate Hike
Canada’s 10-year government bond yield was little changed at around 3.84%, following the Bank of Canada’s first policy rate hike in more than three years in October, as widely expected. The central bank signalled that further increases may be necessary to prevent surging energy costs from feeding into broader inflation. It also raised its 2027 inflation forecast to 3.1% from 2.0% in July, while upgrading its growth outlook to 1% from 0.7%. Despite the hike, the policy rate remains below the estimated neutral level, which neither stimulates nor restrains economic activity. Meanwhile, speculation has grown over the possibility of a last-minute tariff-relief deal between Canada and the US that could provide a political boost to Republican candidates. Canadian Prime Minister Mark Carney, however, described only a slight intensification in trade discussions.
Canada’s 10-year government bond yield was little changed at around 3.84%, following the Bank of Canada’s first policy rate hike in more than three years in October, as widely expected. The central bank signalled that further increases may be necessary to prevent surging energy costs from feeding into broader inflation. It also raised its 2027 inflation forecast to 3.1% from 2.0% in July, while upgrading its growth outlook to 1% from 0.7%. Despite the hike, the policy rate remains below the estimated neutral level, which neither stimulates nor restrains economic activity.
Meanwhile, speculation has grown over the possibility of a last-minute tariff-relief deal between Canada and the US that could provide a political boost to Republican candidates. Canadian Prime Minister Mark Carney, however, described only a slight intensification in trade discussions.