Bank of Canada hikes to 2.50% — first increase in more than three years

The Bank of Canada raised its policy rate by 25 basis points to 2.50% on Wednesday, October 28 – its first rate increase in more than three years, as economists had noted before the decision, ending a hold at 2.25% that had lasted since October 29, 2025.

The Bank’s announcement confirmed the move economists at Scotiabank, Desjardins, BMO and RBC had forecast: the rate went from 2.25% to 2.50% – the level it last sat at in September 2025, before the final cut of the easing cycle. The decision came with the Bank’s Monetary Policy Report, and Governor Tiff Macklem held his scheduled press conference at 10:30 a.m. ET.

What it means for borrowers

Variable-rate borrowing gets more expensive: the big banks’ prime rates – 4.45 per cent before the decision, according to the Bank’s daily digest – move with the overnight rate, so the hike points to a matching quarter-point increase. Variable-rate mortgage and line-of-credit payments rise accordingly. Fixed-rate borrowers are unaffected directly, but five-year Government of Canada bond yields – which fixed mortgages price off – had already climbed more than 40 basis points in the three months before the decision, according to RBC Economics.

The context for the turn: September CPI came in at 3.1%, the third straight month at or above 3%, and crude oil averaged about $95 a barrel since the previous decision – up roughly 54% from a year earlier – keeping inflation risks at the front of the Bank’s mind. We previewed the decision here: who expected what, and why.

The Bank’s next scheduled announcement is December 9, the last of 2026.

Sources: Bank of Canada policy interest rate and Global News (pre-decision forecasts).