Robust activity and a healthy jobs market led the Bank of Canada to hike rates twice (from 0.5% to 1%) over the summer, explains the research team at ING. “They are looking through current inflation figures - which are below target - and are instead concentrating on factors that could lead to higher future inflation.” “But with GDP expected to moderate in 2H17 and given current risks, notably the high CAD, NAFTA uncertainty and high household debt, the BoC is likely to take time to assess the impact of their recent action before contemplating further measures.” “We believe that the BoC will keep their policy rate on hold at 1% through to year end with two further rate hikes in 2018, a slightly less aggressive series of hikes than what we have seen so far and more cautious than the market and consensus predicts. Upside risk to this scenario could materialise if investment growth accelerates due to rising commodity prices.”