Monday's CPI to Test Expectations for December Bank of Canada Rate Hike, ING Says

07:02 AM EDT, 10/19/2026 (MT Newswires) -- Canada's September consumer price index release on Monday will be crucial in shaping expectations for a potential Bank of Canada rate hike in December, according to ING Economics in a note. Headline inflation is forecast to rise 0.2% month on month in September, a modest increase, as core inflation measures remain anchored near 2.0%, wrote the bank in the Monday note. Financial markets are fully pricing in a BoC 25 basis points rate increase this December, alongside 9bps of tightening at next week's policy meeting, said the bank. This limits the potential for further Canadian dollar appreciation, even if the October decision signals a December hike. An earlier-than-expected BoC move next week cannot be ruled out, though market pricing suggests this risk is already adequately reflected, added ING. In this environment, further declines in USD/CAD are likely to be limited, with a rebound toward 1.420 remaining the base-case outlook for both the end of October and year-end, said the bank.