The Bank of Canada raised its target for the overnight rate by 25 basis points to 2.5% on October 28, 2026, with the Bank Rate moving to 2.75% and the deposit rate to 2.45%. In its own release, the Bank said the move was intended to reduce the risk that persistently high oil prices spread more broadly into the prices of other goods and services, after CPI inflation held around 3% since April and was projected to climb toward roughly 3.5% by year-end. Several outlets, including CBC and the Globe and Mail, described the move as the Bank’s first rate increase in more than three years.
The Bank’s own numbers point to an economy running hotter than it expected over the summer: second-quarter GDP growth came in at 3.3%, third-quarter growth is tracking around 2%, and the unemployment rate has held near 6.5% for several months. Governing Council said growth is expected to slow in the fourth quarter because of new US tariffs before picking up again in 2027, and that it will “proceed carefully” on any further rate moves — the next scheduled decision is December 9, 2026.
For anyone holding or shopping for a Canadian mortgage, the practical read is that borrowing costs just moved up for the first time in years rather than staying flat, and the Bank has explicitly left the door open to moving again in December depending on how inflation behaves.
References
Bank of Canada – Bank of Canada raises the policy rate by 25 basis points to 2½%
