This Is How Global Conflict Is Shaping Canadian Interest Rate Predictions

Wahi asked real estate industry professionals — including economists, academics, and REALTORS® — about their predictions for the Bank of Canada’s next rate announcement.

By Josh Sherman | 3 minute read

Leading up to each scheduled BoC rate announcement, Wahi surveys upwards of a dozen real estate leaders to gauge market sentiment and find out where the industry thinks rates are headed.

Global tumult from the U.S.-and-Israel-led war on Iran has yet to shake up Canadian interest rate predictions. 

In another unanimous response, all participants of Wahi’s latest Rate Outlook Panel suggest that the Bank of Canada will hold its influential overnight rate once again at 2.25% at its next scheduled announcement this Wednesday.

“The economic and political dynamics seem to be becoming more complex rather than less so,” says Pauline Lierman, vice president of market research at Zonda Urban. While the war in Iran has the potential to add upwards pressure to inflation, there’s no need for the central bank to respond immediately, she suggests: “We cannot see the Bank of Canada hedging in either direction at this point.”

In the days leading up to each rate announcement, Wahi surveys upwards of a dozen real estate industry professionals, including economists at some of Canada’s biggest banks as well as academics and analysts. Respondents to Wahi’s Rate Outlook Panel are asked whether they anticipate a rate cut — and, if so, by how much — as well as the reasoning behind their decision.

“On balance, we expect higher oil prices to have a net-neutral effect on Canadian and U.S. GDP growth, though with significant regional variations,” says RBC Assistant Chief Economist Robert Hogue in his response to the survey. “We do not expect central banks to rush to respond to what is fundamentally a supply shock, and see both the Bank of Canada and U.S. Federal Reserve remaining on hold through 2026.”

Not long ago, Ethan Currie, an analyst at National Bank suggests, there was speculation about interest rates heading south again in response to weaker economic data. “Since January, economic data has continued to disappoint, and the intermeeting CPI report was benign,” he tells Wahi. “This had investors contemplating rate cuts, before expectations were sharply recalibrated in response to the Iranian conflict.”

Other respondents to Wahi’s Rate Outlook Panel concur.

“With current socioeconomic instability, there is [the] recent question around whether the BoC could in fact hike interest rates at some point later in 2026,” says Mark Fieder, Avison Young Canada’s principal and president. “This would not be surprising, although, naturally, I would rather see interest rates lower, to stimulate investment opportunities — particularly in higher-performing sectors like multifamily, industrial, and retail,” he adds.

“Until two weeks ago, the conversation would have revolved around when the next interest rate cut will come and how many cuts we can expect in 2026. Now, the conversation has to include whether the Bank will need to increase rates in late 2026,” says Moshe Lander, a senior economics lecturer at Concordia University.

If the conflict in Iran persists, elevated oil prices will contribute to higher inflation — not just through higher prices at the pumps, but also costs related to heating and cooling and even packaging. In this event, Lander expects the BoC to act swiftly, beginning a new rate-hiking cycle to keep inflation in check.

“The BoC has already been grappling with the swiftly evolving tariff and trade scenario, and keeping a steady path for the Canadian economy. Now, the war in Iran has heaped new geopolitical uncertainty to the macroeconomic backdrop,” says Penelope Graham, mortgage expert and director of content at Ratehub.ca.