In a significant shift, Manulife Financial has reversed its forecast and now expects two consecutive Bank of Canada rate hikes before year-end 2026. Dominique Lapointe, the firm’s senior macro strategist, cited rising core inflation pressures—which have climbed close to 3% month-over-month annualized for two consecutive months—as the primary driver of this hawkish pivot.
The Bank of Canada has maintained its overnight rate at 2.25% since October 2025. Manulife now targets October 28 and December 9 as the likely windows for the first tightening cycle in nearly three years, potentially pushing rates to 2.75% before year-end.
For GTA real estate investors and buyers, this development carries real implications. Higher borrowing costs could cool demand and affect property valuations. Lapointe’s argument hinges on persistent inflation from Middle East supply-chain disruptions and the need to prevent economic overheating as GDP rebounds sharply.
While some economists like TD Bank’s Derek Burleton remain skeptical, major institutions including Scotiabank and National Bank have aligned with the hawkish outlook. This divided forecast underscores the uncertainty facing Canada’s housing market as monetary policy shifts.
For deeper analysis and the complete forecast, visit the original article on Canadian Mortgage Professional Magazine.
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