Banks Split on Rate Hikes as Contractors Wait on the BoC (ICBA EconoBot)

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Banks Split on Rate Hikes as Contractors Wait on the BoC

The Bank of Canada decides October 28, and the big banks no longer agree on where rates go next. The latest forecast round has TD holding at 2.25% through 2028, BMO holding through 2027 but warning that hike risk is rising, and CIBC pulling its hikes forward to 2.50% in Q1 2027. Scotiabank goes furthest: 2.50% by year-end and 3.25% by Q2 2027, with CPI above 3% for several quarters and diesel alone adding about 0.2 points to core inflation. That is a significant squeeze for contractors. Canada lost 68,000 jobs in September, so demand is soft, yet energy costs keep inflation hot and the Bank cannot cut. Higher financing costs hit every builder who prices a job today and delivers in 2027, and nobody can pass diesel, steel and borrowing costs to a fixed-price client. 

THE NUMBERS — STATISTICS CANADA

Building Permits, August 2026 — Released Oct. 14. Permit value rose 8.8% to $13.6B, all of it residential (+$1.1B to $8.5B). Multi-unit drove it ($5.8B); single-family stayed flat at $2.6B. BC multi-unit added $189.8M, but BC commercial fell $122.0M. Alberta industrial jumped $169.3M and Alberta commercial added $95.4M. Over 12 months, 299,500 dwellings were authorized, down from 305,500. Statistics Canada

Monthly Survey of Manufacturing, August 2026 — Released today. Sales rose 1.5% to $79.9B, led by a record $7.6B in primary metals (+14.0%) on copper and silver demand. In constant dollars sales were flat, and the Industrial Product Price Index rose 1.3%. Higher metals and chemical prices land on contractors’ material bills. Statistics Canada

FROM THE ECONOMISTS

Scotiabank Economics — Tighter Financial Conditions Meet a Resilient Economy — Sees the Bank moving into restrictive territory. It also expects Ottawa’s “Productivity Mega-Deduction” to lift investment about 3% by 2028.

ATB Economics — Geared for Growth — In the fall energy survey, 96% of producers expect higher output, and oil producers target about 10% growth in 2027. For the first time since fall 2022, more services firms report excess demand than excess capacity.

WORTH WATCHING

Pipeline and LNG Final Investment Decisions — In ATB’s survey, 91% expect a positive decision on Pacific Link/Pathways, 93% on Prairie Connector and 97% on Ksi Lisims LNG. Each one means thousands of trades jobs, if Ottawa and the regulators deliver.

IN BRIEF

BOE Report — Canadian Utilities breaks ground on the Yellowhead Pipeline The $2.9B, 235-km line from Peers to Fort Saskatchewan will carry 1.1 Bcf/d, employ about 2,000 construction workers and enter service by late 2027.

BNN Bloomberg — TC Energy completes Indigenous investment deal in Coastal GasLink Five First Nations put $65.3M of their own money into the pipeline, and with TC Energy hold an indirect 35% stake.

COFFEE & CONSTRUCTION

Every Monday, Wednesday and Friday, ICBA’s Jordan Bateman serves up a 10-minute rundown of the news facing BC and Alberta construction on the Coffee & Construction podcast. Catch the latest episode: Approval in July, Shovel in October | ICBA Coffee & Construction #41. Subscribe free on YouTube (@ICBATV), ICBA’s socials, or wherever you download podcasts.