The Bank of Canada raised its policy rate by 25 basis points to 2.5% on October 28. Mortgage terms, debt costs and inflation determine the impact on households.
Update · October 29, 2026
The Bank of Canada raised its overnight policy rate by 25 basis points to 2.50% on October 28. The reporting below is the October 24 preview, preserved to distinguish the forecast from the subsequent decision. The central bank cited persistent inflation pressure and elevated energy prices. Official Bank of Canada statement.
A majority of economists surveyed by Reuters expect a Canadian rate increase next week, but the central bank has not made its decision.
Canada is approaching its next interest-rate decision with a newly divided outlook. A Reuters poll conducted October 21–23 found that 19 of 34 economists expected the Bank of Canada to raise its overnight rate by 25 basis points, from 2.25% to 2.50%, at the October 28 meeting. That is a majority prediction, not a confirmed policy change.
Why expectations shifted
Canada’s annual inflation rate rose to 3.1% in September, slightly above the upper edge of the central bank’s 1%–3% target-control range. Survey evidence also pointed to rising inflation expectations among businesses and consumers. Markets interpreted recent comments from Governor Tiff Macklem as keeping a rate increase firmly on the table. None of these observations requires policymakers to move; each changes the balance of risks they must assess.
Growth still argues for caution
The economists surveyed did not agree. Some preferred a pause because economic growth remains vulnerable. Weak output, trade uncertainty and borrowing costs create reasons to avoid tightening too aggressively. Higher rates may help restrain demand-driven inflation over time, but they can also place additional pressure on mortgage borrowers and firms financing investment.
Mortgage holders should check the contract
The effect of an overnight-rate increase differs by product. Variable-rate mortgages, floating-rate loans and some savings products may respond more quickly than fixed-rate contracts. Payment changes depend on each agreement and lender policy. Homeowners should model the cost of an additional quarter percentage point without assuming that one poll predicts a whole sequence of future hikes.
Markets price probabilities, not certainties
The Canadian dollar gained as investors became more confident in the possibility of tighter policy. Currency markets also respond to oil prices and economic releases, so it is misleading to attribute every move to interest rates alone. A surprise hold could alter market pricing even if the central bank’s written assessment still warns about inflation.
What to watch
The October 28 decision, updated inflation projections and subsequent guidance will matter more than the poll itself. The Money no Sofá view: forecasts are useful for preparing scenarios. They are not permission to borrow, invest or refinance as though the future is already settled.
Source: Reuters economist poll, October 23, 2026.
Money no Sofá editorial analysis. All cited market readings refer to their stated release or trading date; future policy decisions are not yet confirmed. This article is informational, not individualized financial advice.
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