The Bank of Canada's October 28 rate increase and inflation outlook now set the near-term policy baseline for Canadian interest-rate and bond markets.
The decision and the next deadline
The Bank of Canada increased the target for its overnight interest rate by 25 basis points, from 2.25% to 2.50%, on October 28, 2026. The Bank Rate is now 2.75% and the deposit rate 2.45%. Its next scheduled policy-rate announcement is December 9, while the next quarterly Monetary Policy Report is due January 27, 2027. Those are the confirmed Bank of Canada dates; speculation about a further increase is not itself a decision.
A slower retreat in inflation
The Bank's October Monetary Policy Report projects consumer price inflation averaging around 3% in 2027, a full percentage point higher than it projected in July, before moving to about 2% around the middle of 2028. It expects high energy prices and broader pass-through of business input costs to keep price pressures persistent. The report distinguishes the gasoline-related rise in headline inflation from core measures near 2%, cautioning that price pressure can spread beyond a single volatile item.
More growth, but substantial risk
The Bank estimates that Canadian real GDP growth could reach 1% in 2026 and 2% in both 2027 and 2028. It expects weakness associated with new U.S. tariffs to affect late-2026 growth, while business investment, exports and fiscal measures support activity thereafter. Those projections differ in emphasis from the Parliamentary Budget Officer's independent fiscal outlook; both are models subject to trade-policy, oil-price and other uncertainties. They are not final actual GDP results.
What this does and doesn't mean for investors
Overnight policy rates most directly influence short-term funding. Government bond yields, mortgage pricing, savings products and the Canadian dollar also respond to global markets, expectations, credit costs and term premiums, so they need not all move by exactly 0.25 percentage points. An investment return or mortgage rate should not be inferred solely from the Bank's headline decision. For readers watching the next change, the official December 9 statement remains the definitive source.
Sources & transparency
Bank of Canada — policy rate decision, October 28Bank of Canada — Monetary Policy Report, October 2026Original CDN News coverage. Sources are linked for reference.
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