OTTAWA — Bank of Canada Senior Deputy Governor Carolyn Rogers steps into a high-stakes spotlight Thursday with a speech that could either anchor or upend market bets for interest-rate increases in 2026. Traders now price in at least three interest-rate increases in 2026 amid a rapid turn in expectations.

Rogers, a veteran policymaker overseeing financial stability, has emphasized monetary policy amid uncertainty. Her remarks before the Brandon Chamber of Commerce come as markets react to recent developments placing her words under intense scrutiny just after the central bank’s March decision.

MARKET EXPECTATIONS FLIP RAPIDLY

The rapid turn in rate forecasts traces back to recent data releases. Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Rogers discussed the March 18, 2026 monetary policy decision, where Governing Council maintained the policy interest rate at 2.25%.

Overnight index swaps signal expectations for tightening, reflecting concerns over inflation amid heightened uncertainty related to US trade policy and geopolitical risks, including the war in Iran pushing oil prices sharply higher. This aligns with broader global trends, where similar inflation worries have emerged. Rogers’ speech, on economic developments, monetary policy and affordability, is expected to address these dynamics.

INFLATION CONCERNS ELEVATE STAKES

Canada’s inflation battle remains uneven. Inflation in Canada has been close to the 2% target for more than a year, but the war in Iran is causing oil prices to move sharply higher and this will push up inflation in the short term. Macklem reiterated at the March 18 press conference following the monetary policy decision that the economy faces heightened uncertainty. Rogers, who joined the Bank’s Governing Council in 2021, has advocated caution on monetary policy amid risks.

Risks to inflation are tilted to the upside because of the sharp increase in energy prices. Economists have reassessed forecasts citing upside risks. A Trump administration’s proposed tariffs, should they materialize post-2024 election, could exacerbate imported inflation, a point Rogers may touch on. The review of the Canada-United States-Mexico Agreement adds uncertainty.

IMPLICATIONS FOR BANKS, BORROWERS

The repricing ripples through Canada’s financial system. Big Six banks face margin squeezes if deposit costs rise without loan growth. For households, higher rates threaten spending. Business investment shows resilience bolstered by U.S. demand. Rogers has flagged vulnerabilities: household debt-to-income levels leave little buffer. Markets await her tone—dovish hints could spark a selloff, while hawkish resolve might cement the tightening narrative.

GLOBAL CONTEXT SHAPES OUTLOOK

Canada’s path diverges from peers. The ECB and Fed eye cuts amid cooling data in some areas, but the Bank of Canada faces economic weakness combined with rising inflation. Oil prices support exports, while a weakening Chinese economy caps commodity upside. Economic weakness combined with rising inflation is a dilemma for central banks. Raising interest rates to slow inflation could further weaken the economy. Easing interest rates to support growth risks pushing inflation well above target. Canada’s outlook is further complicated by structural change—shifting trade relationships, the adoption of AI, and changes in demographics. The Bank is committed to ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. As traders parse every word, her address underscores the Bank’s vigilant restraint in an uncertain landscape.