Will the Bank of Canada cut rates at all in 2026?

The Bank of Canada has not cut interest rates once this year. It has met six times in 2026 and left its rate at 2.25% every time, most recently on September 2. Only two meetings are left, on October 28 and December 9, and Kalshi's contract on the number of cuts puts the chance of zero cuts this year at about 92%.

The pause makes sense once you see what Canada is dealing with. Gasoline cost Canadians 22.8% more in August than a year earlier, as the conflict in Iran kept oil expensive, and that alone pushed overall inflation to 3.0%, a full point above the bank's 2% goal. A rate cut makes loans and mortgages cheaper, which helps people spend more, and that is the last thing a central bank wants when prices are already rising too fast.

If anything, the bank is leaning the other way. Speaking in Halifax on September 21, Governor Tiff Macklem weighed only one move: “We don't want to raise our policy rate and restrain growth if inflationary pressures are contained. But nor do we want to be too slow to respond if inflationary pressures are becoming more persistent.” Simply put, Governor Tiff Macklem was choosing between holding or raising. So, a cut was not part of the conversation.

Of course, the market noticed that instantly. Before the September 2 meeting, traders gave the bank a 94% chance of holding rates in October. Now they see that meeting as a coin flip between holding and raising, with a hike slightly ahead, mostly because of oil prices. 

Either way, a cut is not one of the two options. And Canada's biggest neighbor is already moving up. On September 16, the U.S. Federal Reserve raised its rate for the first time in more than three years. So the likeliest ending to 2026 is the one traders are already paying for, which is a full year without a single Canadian rate cut.