Key takeaways
- The overnight rate target rose 25 basis points to 2.50% on October 28, 2026.
- Variable rates follow prime and will likely rise. Fixed rates follow bond yields and do not change until you renew.
- The Bank says it may need to raise rates further but will proceed carefully. The next announcement is December 9, 2026.
What happened
On October 28, 2026, the Bank of Canada raised its policy rate by 25 basis points to 2.50%. The Bank Rate is now 2.75% and the deposit rate is 2.45%. The next rate announcement is scheduled for December 9, 2026, and the next Monetary Policy Report for January 27, 2027. 1
Why the Bank raised its rate
The Bank says inflation has been higher and more persistent than it expected in July. CPI has been around 3% since April and is expected to reach about 3.5% by the end of the year, then average 3% in 2027 before returning to 2% around the middle of 2028. Persistently high oil prices and the conflict in the Middle East are a main concern. Growth has also been stronger than expected, with GDP up 3.3% in the second quarter, and unemployment has been around 6.5%. 1
What it means for your mortgage
Variable rate: your rate will likely rise along with your lender's prime rate, which usually moves in step with the policy rate. Depending on your mortgage, your payment may stay the same, with more of it going to interest, or it may increase. 2
Fixed rate: fixed rates follow bond yields. Your current rate does not change until your term ends, but a new or renewing fixed mortgage could cost more. 2
On a $500,000 mortgage amortized over 25 years with Canadian semi-annual compounding, a rate that is 0.25 percentage points higher (4.45% instead of 4.20%) adds roughly $69 a month. Your numbers will differ. Try your own in the payment calculator.
What could come next
The Bank says there could be a need to raise the policy rate further, but it will proceed carefully because of uncertainty around the Middle East, how businesses respond to cost pressures, and Canada-US trade. 1 TD Economics expects one more 25 basis point increase in the first quarter of 2027, which would take the policy rate to 2.75%, roughly the middle of the Bank's neutral range. After that, it says the bar for further increases should rise significantly. 3
Forecasts are opinions, not promises. If your renewal is coming up, ask about a rate hold early and compare your lender's offer with other options.
Sources and further reading
- Bank of Canada: Bank of Canada raises the policy rate by 25 basis points to 2½% (October 28, 2026)
- RBC: Bank of Canada interest rate update
- TD Economics: Bank of Canada interest rate announcement (October 28, 2026)
This article is general information, not personalized mortgage, legal, tax or financial advice. Rules, rates and eligibility change and depend on your circumstances and lender criteria. Confirm details before you make decisions.
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