The Bank of Canada raised its policy interest rate by 25 basis points to 2.50% on October 28, 2026, citing stronger economic activity and persistent inflation risks. The Bank Rate is now 2.75% and the deposit rate is 2.45%. The next scheduled policy announcement is December 9.
Why rates rose
Canada’s economy expanded 3.3% in the second quarter and growth was estimated near 2% in the third quarter. CPI inflation has remained around 3% since April, while higher energy and transport costs are expected to lift it to about 3.5% by the end of 2026.
Growth and inflation outlook
The Bank forecasts Canadian GDP growth of 1% in 2026 and 2% in both 2027 and 2028. Inflation is expected to average around 3% in 2027 before returning to 2% near mid-2028.
What investors will watch
Officials have left open the possibility of further increases while emphasizing a cautious approach. Investors will monitor inflation, employment and energy prices ahead of the December 9 meeting. Additional tightening could support the currency and bond yields while challenging borrowers and rate-sensitive companies. Any further increase is a possibility, not an announced decision.
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