Carolyn Rogers

OTTAWA—The Bank of Canada has a chance later this week to either rebut or buttress traders’ expectations for at least three interest-rate increases in 2026 when its No. 2 official speaks to a business audience in Western Canada. The central bank left its policy rate unchanged March 18, arguing that it was premature to determine the total economic effect from the war in Iran. Bank of Canada Gov. Tiff Macklem added that the risk of higher energy costs spreading and lifting prices for other goods and services appeared contained, reflecting an elevated level of spare capacity in the economy. Traders believe differently, and as Monday morning had priced in the likelihood of up to three interest-rate increases by the end of 2026, reflecting fears of a prolonged period of sharply higher energy prices. Yields on two- and five-year government of Canada bonds climbed since last Wednesday. [to access the full story a WSJ subscription is required]