With inflation still running at more than twice the BoC's 2% target, the job market strong, growth resilient and signs the housing market may be turning, most say there is still a distinct possibility the BoC breaks the rate pause it has had in place since January.
Growing expectations of at least one more rate increase from the U.S. Federal Reserve could also put additional pressure on the BoC to resume its policy tightening.
Still, a strong majority - 24 of 28 - said the BoC will hold its policy rate at 4.50% at the conclusion of its meeting on June 7. About two-thirds majority expect no further changes to the overnight rate for the rest of the year.
Four economists polled May 25-June 1 forecast a 25 basis point rise to 4.75% at the June meeting, while one said the BoC will wait until July. Markets are currently pricing in a roughly 60% probability of a rate rise by then.
Nearly three-quarters of respondents to an extra question, 11 of 15, said the risk of at least one more rate hike from the BoC was high and that if it did, that move would come either this month or next.
"Given that rates are already elevated, it can afford to wait until July, when it's due for a forecast update, to decide if it actually needs to tighten further," said Avery Shenfeld, chief economist at CIBC Capital Markets.
"We're still hopeful that upcoming employment and inflation data will be tame enough to keep the Bank on hold this year, but concede that the risk of a further modest dose of rate hikes has risen."
The economy grew at a much faster-than-expected 3.1% annualized pace in January-March after a contraction in the quarter before, also beating the central bank's own projection.
Housing market activity, a key contributor to the country's economy, has turned up, with average prices rising again in some key markets across the country.
BoC Governor Tiff Macklem, meanwhile, recently played down an unexpected rise in inflation to 4.4% in April from 4.3% in March as an anomaly, reasserting it would continue to fall.
But a separate Reuters poll taken before news of that unexpected rise forecast inflation to stay above the BoC's target at least until 2025.
"As GDP growth and CPI inflation have both surprised to the upside of the BoC's forecasts, we now judge it will raise interest rates next week rather than wait until July," noted Stephen Brown, deputy chief North America economist at Capital Economics.
(For other stories from the Reuters global economic poll:)
(Reporting and polling by Milounee Purohit and Mumal Rathore; Editing by Ross Finley and Toby Chopra)
By Milounee Purohit
