The BoC bumped interest rates by 25 bps after seven straight pauses, as the risk of elevated inflation outweighed macro uncertainty - with near-term inflation projections climbing…

… and expectations for a return to the 2% target pushed out until mid-2028, driven by upward pressure from energy…

… as well as stronger GDP growth on the back of higher business investment and government spending.

While today’s decision was well-telegraphed, we’ll be watching to see if today’s hike was merely “insurance” or if this could be the start of a tightening cycle.

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There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully. The Bank remains committed to maintaining Canadians’ confidence in price stability.

Tiff Macklem (Bank of Canada governor) - October 2026

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