The Bank of Canada will make its second-last interest rate decision of 2023 on Wednesday, and most economists believe the central bank will hold its overnight rate steady at five per cent.

As of Friday, nearly all economists surveyed by Bloomberg expected the Bank of Canada would hold its benchmark interest rate at its Oct. 25 decision.

Economists calling for a rate pause cited recent data suggesting the country’s economy is softening – though signals are still mixed.

“Economic data releases since the Bank of Canada opted to forego an interest rate hike in September have been mixed, but we expect that they on net have made a hike at next week’s decision unlikely,” RBC economists said in a Friday report.

“Underlying inflation pressures in Canada are still running well above the two per cent inflation target, but softer economic growth numbers and the central bank’s own Business Outlook Survey suggest that price growth will continue to decelerate.”

Inflation data released this week from Statistics showed the consumer price index slowed to 3.8 per cent year-over-year in September in September, down from a four per cent gain in August, shifting the general outlook further towards a likely rate hold.

Another Statistics Canada data release on Friday showing flat retail sales from last month further bolstered that view.

Economists with CIBC and TD Bank published reports Friday saying the Bank of Canada is likely to leave rates alone next week.


CIBC Capital Markets chief economist Avery Shenfeld said he doesn’t share the central bank’s worry that inflation will prove sticky in the face of what he described as an “evident economic slowdown.”

In a Friday report, Shenfeld wrote that he believes the Bank of Canada’s inflation worries will see it maintain a “somewhat hawkish tone,” leaving the door open to further hikes if the bank doesn’t see continual progress towards its two per cent target.