MNI BoC Preview-Apr 2026: Still Waiting For Clearer Signals

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EXECUTIVE SUMMARY:

• The Bank of Canada is overwhelmingly expected by both markets and analysts to maintain its overnight rate for a 4th consecutive decision at 2.25% at the April meeting (announcement on April 29).
• The BOC is seen highlighting that it will not allow higher energy prices to turn into persistent inflation amid a spike in energy prices, while acknowledging downside risks to growth amid significant uncertainty caused by the war in the Middle East. In other words, the expectation is for a relatively neutral message on the path of rates ahead that leans toward more caution on inflation than on growth.
• A more hawkish outcome would include further emphasis on upside energy-driven inflation risks and concern over rising expectations, with heavily-upped CPI and (possibly) somewhat slightly raised growth projections in the Monetary Policy Report.
• Conversely, the BOC could echo March’s dovishly-interpreted meeting by downplaying relatively solid recent activity data and emphasizing that it will look through near-term rises in inflation, while reminding of other downside risks on the horizon including on US-Canada-Mexico trade.
• Hikes still don't appear to be a near-term prospect per OIS market-implied pricing, but a tightening bias is evident overall. There are roughly 1 and a half hikes (of 25bp increments) implied by end-2026 – versus a very slight easing bias implied at the end of February before the war in the Middle East erupted.
• Analysts remain nearly unanimous that the next move will be a hike rather than a cut, but the vast majority see a hold through the rest of this year as the BOC remains wary of inflation.