Bank of Canada eyes a hike on Wednesday

What happened

The Bank of Canada announces its next interest rate decision on Wednesday, 28 October, at 9:45 a.m. Eastern time, and “Wednesday” has become one of Canada's top Google searches ahead of it. Reuters reported on 26 October that money markets are pricing a 25-basis-point hike that would take the overnight rate to 2.5%. It would be the bank's first hike since July 2023 and its first policy change in a year.

The details

In a Reuters poll of 34 economists taken from 21 to 23 October, 19 expected a quarter-point increase this week, and a majority forecast one more rise before March. The decision comes with the quarterly Monetary Policy Report, in which the bank is expected to raise its inflation forecast for the coming year substantially. Annual inflation rose to 3.1% in September, driven almost entirely by energy, while core measures eased below 2%, the midpoint of the bank's 1% to 3% target range, Reuters reported.

Why economists are split

The case for a hike rests on oil. RBC Economics said West Texas crude has averaged about $95 a barrel since the last decision, 54% more than a year earlier, and that the bank has stressed the inflation risk from energy. Yet RBC called its own hike forecast “very low conviction” and saw almost equal odds of the bank holding and signalling a move in December or January instead. Reuters noted weak job reports, slower third-quarter growth and higher US tariffs planned for January on some Canadian goods, including autos and steel.

What it means for the Canadian dollar

Hike expectations have already supported the currency. On 21 October The Globe and Mail reported that the Canadian dollar was holding near a four-week high against the US dollar, helped by a softer greenback and a more hawkish central bank. One currency dealer quoted by the paper said the outlook remains uncertain. The US Federal Reserve also announces a decision on Wednesday and is largely expected to hold rates, according to Reuters, so both sides of the CAD/USD pair move on the same day.

Why it matters for payments

Exchange rates decide how much arrives when money crosses a border. For anyone sending or receiving an international money transfer to or from Canada, a move in the Canadian dollar changes the amount on the other side, even when the amount sent stays the same. The same goes for families who rely on remittances, which simply means money sent home from abroad. A money transfer app that shows the rate before you confirm lets you see that change before you pay.

What to watch next

Watch the decision and the Monetary Policy Report at 9:45 a.m. ET on Wednesday, and especially the bank's guidance on what comes next: RBC says that guidance matters more for the medium-term outlook than a single quarter-point move. After that, the next inflation data and any news on US tariffs will shape expectations for December. None of this is investment advice.

What it means for Odix Pay users

If you send money to or from Canada, Odix Pay money transfer shows the fee and the exchange rate before you confirm, where the corridor is supported. To receive payments in euros, you can get a personal EUR IBAN in your own name. Our guide on how to send money abroad lists what to check before an international transfer. Availability depends on your country, and fees are shown in the app. More stories in the Odix Pay newsroom.