FX.co ★ Canadian Bond Yields Steady as Markets Assess BoC Rate Hike

Canada’s 10-year government bond yield was steady at around 3.84%, after the Bank of Canada delivered its first interest rate increase in more than three years in October—a move that had been widely anticipated. The central bank signalled that additional rate hikes may be required to keep surging energy prices from spilling over 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%. Even after the hike, the policy rate remains below the estimated neutral level, which neither stimulates nor restrains economic activity.

At the same time, speculation has intensified about the prospect of a last-minute tariff-relief agreement between Canada and the United States that could deliver a political boost to Republican candidates. Canadian Prime Minister Mark Carney, however, said trade talks had only “slightly” intensified.